Renting - Dead money ?

Dan29

Toto wrote:

But buying a house only makes you money if you sell and downsize or move to a cheaper area. I know it's been said a million times but if your house price goes up, so does everyone else’s.

But that means if you are renting, house prices could be going up much faster than you can save, whereas if you'd owned somewhere, you would be more or less keeping step with average prices. In other words in a rising market you could lose out big time regardless of whether you eventually downsize or change area.

odLott wrote:

People calling renting dead money probably just bought an overpriced property they can hardly afford and try to convince themselves it was worth it.

No. I was calling it dead money in 1996 so I bought a flat. Eight years later I moved to a different part of the UK and now I have a six-figure sum in the bank that I wouldn't have if I hadn't bought somewhere.

EagerLearner

I agree with you Chrissie1 - except - as a first time buyer it's impossible for many to even get on the property ladder now, so it becomes a mute point - many of us have no choice and have to rent regardless of what we would prefer... A property market with no first time buyers on the bottom rung is bad news and not enough is being done by the government to give us a helping push onto the ladder.

I've spoken to alot of people in the same boat, all being forced to rent for now even though some would like to buy & even have deposit ready. Problem is the cost of the mortgage makes buying prohibitive...

I'll be buying ASDA cheap digestives in my old age at this rate...

EagerLearner

Toto

ChrissieI wrote:

If you are buying your house then hopefully the mortgage will be paid off by the time you reach old age and you can live mortgage free. .

Until you have to go into a home and the government take your house to pay for it!

ChrissieI

Toto wrote:

Until you have to go into a home and the government take your house to pay for it!

I don't mind if my house has to pay for me to be in a home. I can't live in two places at once.
I hope to see my son is financialy secure before my old age. He is only 20 years younger than me so if they take my house when I am 80 we should have plenty of time to make sure my son is ok. He will of course be an old man himself by then:rotfl:

lightspeed

EagerLearner wrote:

I agree with you Chrissie1 - except - as a first time buyer it's impossible for many to even get on the property ladder now, so it becomes a mute point - many of us have no choice and have to rent regardless of what we would prefer...

EagerLearner

IMHO i think that this is a generalisation made far too often these days.

Not all property is unattainable for FTB's. There are areas (and not undesirable) in the country where FTB properties are still affordable you may just be paying slightly over the odds (compared with 4/5 years ago), if that bothers people then rent, but to say its impossible to get on the ladder is completely incorrect.

I have mentioned it before and will mention it again... the north and south divide appears to be massive. I feel that many of the people who harp on about how expensive houses are, live in the south. Yes, there have been big increases in the north but there are still reasonably priced homes out their.

Prices have increased across the country but the main difference is that in London there just doesnt appear to be what i would call "good value for money" property, i mean, who pays 150K for a 1 bed flat? There are decent areas in the north where that would get you a nice 2/3 bed semi with a drive, gardens and a garage.

Personally, i think current prices are here to stay on a national scale with some fluctuation but i just cant see national decreases of averaging more than 15%, however, in the south there is definitely room for some sizeable (20-30%) reductions in overvalued properties.

F_T_Buyer

lightspeed wrote:

IMHO i think that this is a generalisation made far too often these days.

Not all property is unattainable for FTB's. There are areas (and not undesirable) in the country where FTB properties are still affordable you may just be paying slightly over the odds (compared with 4/5 years ago), if that bothers people then rent, but to say its impossible to get on the ladder is completely incorrect.

Sigh.

I could go live up north, but it's a bit of a commute to work. Oh change jobs you say? I wouldn't earn as much up north.

Why don't I get a BTL up north then? Because the rent + housing costs + risks wouldn't cover the interest only mortgage? Ahhh, but you can afford the mortgage on my current income. Yeah so, why don't I buy a £100,000 dolls house and rent it to my 2 year old niece for penny sweets.

That is just bubble logic. I can't see how anyone can argue house prices are not a bubble. Especially when that view is held by the governor of the bank of england, most economists, the IMF etc etc...

F_T_Buyer wrote:

Buying a cup of hot tea is also dead money. I mean, what have you got to show after you have drank it?

And what's with all this dead money talk? It's such a simple concept to grasp.

Most people cannot afford a house outright, so they have to borrow money. If they own the house they also have to pay repairs and the like. If the cost of renting (plus other house owner associated costs) the money from the bank is more expensive than renting from a landlord, then renting makes sense. And vica-versa.

The point I'm making about the tea (above) is that your income does not all go into investments. Your income also has to be spent on living, such as buying your groceries, and renting [from a landlord] OR renting the money [from the bank].

If you are saying renting is dead money, every non investment you spend your money on is also dead money. And how many on here have debts from spending all that [STRIKE]dead money[/STRIKE] on consumerism?

Dan29

F_T_Buyer wrote:

Most people cannot afford a house outright, so they have to borrow money. If they own the house they also have to pay repairs and the like. If the cost of renting (plus other house owner associated costs) the money from the bank is more expensive than renting from a landlord, then renting makes sense. And vica-versa.

That's unless house prices go up during the period you're living in the house?

bunking_off

Toto wrote:

Until you have to go into a home and the government take your house to pay for it!

If you follow that logic we might as well close down this site and not bother saving any money, because ultimately any money saved on anything will be grabbed by the government to pay for care home fees so why bother being an MSEr?

As others have said, renting and IO are largely equivalent. The difference where I am (NW England, I accept that SE England is very different) is that a house buyer has a choice of houses at any point on the ladder; on the contrary, there are very few rental properties at the middle/upper end of the market - terraced home fine, 4 bed detached, you'll be lucky. Also, there's the aspect of being able to decorate to your taste (a house is a home, not an investment).

Oh, and to the earlier poster - my mortgage debt is approx 10% of the house value (I wouldn't term that as saddled with debt), and I've already taken substantial sums out as cash when I moved from SE to NW, so the mantra that all prices rise in tandem and you never really gain is a false one in my case...

F_T_Buyer

Dan29 wrote:

That's unless house prices go up during the period you're living in the house?

Yes, but in the situation I have outlined, if renting is cheaper then housing is over valued on the P/E measure. And what happens to things over valued?

Also, if you used your logic then buying would be dead money if prices were falling - even if house prices fell to 2 pence. There would be a point when it makes sense to buy again.

Also you are assuming everything is dead money if it is not going up as fast as housing? So is housing dead money compared to the stock market which has massively out performed property over the last few years?

All swings and round-abouts this.

EagerLearner

lightspeed wrote:

IMHO i think that this is a generalisation made far too often these days.

Not all property is unattainable for FTB's. There are areas (and not undesirable) in the country where FTB properties are still affordable you may just be paying slightly over the odds (compared with 4/5 years ago), if that bothers people then rent, but to say its impossible to get on the ladder is completely incorrect.

Ahem, I guess I must be 'completely incorrect' along with thousands of others then. :rolleyes:

Like F_T_Buyer, according to your logic I too will need to commute north everyday if I want to keep in touch with my FAMILY and FRIENDS and SOCIAL LIFE. This is not a 'generalisation' - have you not seen the papers/tv recently stating that the lack of first time buyers is a problem? Perhaps you think we're all just being difficult... and like me, FTBs don't want to move hundreds of miles just for a property, losing out on quality of life re family, friends, social life, schooling etc.

Ok, so there are affordable properties in some pockets of the UK but why should I move from where I have lived and worked all my adult life? I have earned the right to buy in my area by living and working here, yet those with money from London and investors have bought up any possible affordable flat we could have had. My brother was in the same situation as an FTB and was forced out to Eastbourne where he's miserable, as well as a work colleague who moved to Eastbourne a year ago and is now doing everything she can to get out of there and move back.

lightspeed wrote:

...however, in the south there is definitely room for some sizeable (20-30%) reductions in overvalued properties.

I do agree with you on this - there IS lots of room for sizeable reductions! :j