Cost of Rents: Homeowners: Could you afford to rent your house if it wasn't yours?

wageslave

sss555s wrote: »

It is beautiful, especially in the summer.

Do you mean the place in the layby?

Wow, you been there.

Don't tell me it isn't beautiful.

I like to look, regard it as the voyeur in me.

sss555s

wageslave wrote: »

Wow, you been there.

Don't tell me it isn't beautiful.

I like to look, regard it as the voyeur in me.

I know the road pretty well and was by there about 6 weeks ago on my way to Stranraer.

I haven't tried it but it seems popular and looks better since they changed it to a building.

Gatehouse is a really nice little place too.

HAMISH_MCTAVISH

Procrastinator333 wrote: »

But do most people see much growth in prices in the short term? I think even hamish is predicting stagnation for next 12 months. That is from memory, so please correct (sure u will) and sorry if wrong hamish.

I'm predicting +3% to +7% for 2010, slightly lower but still positive for 2011, and closer to 10% in 2012.

Buy as soon as you can is not always the best advice.

Unless you are demonstrably in the middle of a stonking great crash, it invariably is.

Putting aside the issue that markets rarely stagnate, the problem with waiting is you don't know what's happening until it's too late.

Like, oh..... the last 12 months or so.;)

wageslave

sss555s wrote: »

I know the road pretty well and was by there about 6 weeks ago on my way to Stranraer.

I haven't tried it but it seems popular and looks better since they changed it to a building.

Gatehouse is a really nice little place too.

You were going to Stranraer because......

RandomDan

I would have to be unemployed to afford rent here (Surrey, commuter belt). Am on modest wage and rents for 1 beds are 625pcm. I would have to go to a studio flat or house share if I sold. I currently pay 400pcm including overpayments to get me mortgage free by 2020 (bought 2000).

This may all change if interest rates do, so I am avoiding the smug; and I am sure they will

Procrastinator333

HAMISH_MCTAVISH wrote: »

Unless you are demonstrably in the middle of a stonking great crash, it invariably is.

Rubbish. As shown. Stagnation when interest rates are lower than rental costs it is also beneficial to rent. That is a fact, not open for debate.

HAMISH_MCTAVISH wrote: »

the problem with waiting is you don't know what's happening until it's too late.

So had someone followed your advice they would have bought in 2008. That would have turned out well for them.

Buying is only beneficial in either a rising market or if interest costs are lower than rental costs. So in financial terms, the decision to buy should be driven by opinion on the direction of house prices.

chucky

Procrastinator333 wrote: »

Rubbish. As shown. Stagnation when interest rates are lower than rental costs it is also beneficial to rent. That is a fact, not open for debate.

you know and i know that this isn't true - your LTV determines your mortgage repayments along with interest. the deposit or equity invested in the property 'earns' HPI while cash in the bank earns 2.8% before tax.

it's not so easy to say one is better than the other - they both have their virtues and both suit people's circumstances.

you forget the hassle factor of renting where you could have a 'busy' landlord who doesn't let you enjoy your home. you don't get that when you own - that in itself you can't put a cost on.

silvercar

No comparables seem to come up to see the rental value of my house. I guess the rental yield would be 4-5%; as my mortgage rate is only 1.25%, renting would be far more expensive.

If I did sell up and rent a similar property, my equity would probably only get me 3% max, so renting still wouldn't pay.

HAMISH_MCTAVISH

Procrastinator333 wrote: »

Rubbish. As shown. Stagnation when interest rates are lower than rental costs it is also beneficial to rent. That is a fact, not open for debate.

Ummmm, when interest costs are lower than rent, you should buy. No brainer.

And again, stagnation is not the natural state of any market. It either rises, or falls.

So had someone followed your advice they would have bought in 2008. That would have turned out well for them.

No, because in 2008 we were in the middle of a stonking great housing crash. Which I noted above is the exception.

Although in fairness, prices are already back to 2008 levels as a national average, so depending on the month they'd have done fine.

Buying is only beneficial in either a rising market or if interest costs are lower than rental costs. So in financial terms, the decision to buy should be driven by opinion on the direction of house prices.

True.

But even by your own calculations, it only takes a tiny gain in house prices to screw up your plans. 2.5% or so from memory.

Seems very risky to me. If prices fall a few percent, you'll be mildly annoyed that you might have been able to buy a bit cheaper. If prices rise a few percent, you've wasted a year of savings and rent. If prices rise like they have in the last year, you could be priced out.

Procrastinator333

chucky wrote: »

you know and i know that this isn't true - your LTV determines your mortgage repayments along with interest. the deposit or equity invested in the property 'earns' HPI while cash in the bank earns 2.8% before tax.

it's not so easy to say one is better than the other - they both have their virtues and both suit people's circumstances.

you forget the hassle factor of renting where you could have a 'busy' landlord who doesn't let you enjoy your home. you don't get that when you own - that in itself you can't put a cost on.

I stated when prices are stagnant, so there is no hpi. Ltv is then very important. Until you are at about 20%, interest costs are likely higher than rental costs. In such circumstance the renter is financially better off.

Agreed there are many other factors that swing it for many. Some see renting as more hassles, some see buying as more hassle.
But the fact is if prices are stagnant and interest rates are greater than rental costs, you will own the house quicker by initially renting and saving the difference.

In purely financial terms, unless hpi is over 1 or 2% (exact number depends on difference between rent and int cost), the ftb is better of waiting IF they are of the opinion stagnation is the likely outcome.

The same math actually makes an argument for not sitting on a large deposit, say 50%. They would have access to a lower rate and on top of that they would get taxed on the income their 50% is generating. My rough guess is they need 3-4% falls just to break even.