Buying Cheaper Than Renting in 75% of UK

twirlypinky

HAMISH_MCTAVISH wrote: »

Finally, you admit that buying is better for 3 in 4 people.

And buying is better and cheaper for 100% of people over the long term.....;)

Apart from the people that buy their own home and then have to sell it to fund their places in a residential home, sitting alongside the people that didn't own their own home and get funded by the council. I'm not convinced they are better off.

In fact, since we can't actually take our money with us when we die - are we really better off?

chucky

Procrastinator333 wrote: »

I'm not advocating gambling. How is making an informed decision gambling?

investing in property is always a gamble - the house always wins

the_flying_pig

Procrastinator333 wrote: »

Agreed many can't grasp this point. But it doesn't make it any less true. And as long as people are saying renting is wasted money I will keep making this point.../QUOTE]

nah, it's a never-ending 'whack-a-mole' game... one could back hamish into a corner and force him to admit, after a painstaking point-by-point discussion, that he was talking rubbish but within a day or two at most he'd be back trotting out the same old line, possibly in a very slightly different form, on another thread...

chucky

Procrastinator333 wrote: »

I have never said it is better long term. But it can make a large difference short term. And the main point of this comment is to argue aginst the ignoarant idea that rent itself is somehow a waste compared to a mortgage. Not always true.

very true - personal circumstances and timing are important.

i know you're short term argument and do understand it.
however, i'm not totally convinced to the delaying the start of the property purchase.

for example -
don't buy and wait and pay rent for 5 years then mortgage for 25 years
or
buy now, mortgage for 25 years, rent free last 5 years.

Idiophreak

Procrastinator333 wrote: »

I'm not advocating gambling. How is making an informed decision gambling?

It's not an informed decision, it's an educated guess. To hold off from buying a property for a year's tenancy in rental, you have to speculate on the housing conditions for the whole of that year. It's an educated guess, but still a guess - and if you're guessing, you're gambling.

Procrastinator333

chucky wrote: »

very true - personal circumstances and timing are important.

i know you're short term argument and do understand it.
however, i'm not totally convinced to the delaying the start of the property purchase.

for example -
don't buy and wait and pay rent for 5 years then mortgage for 25 years
or
buy now, mortgage for 25 years, rent free last 5 years.

No because the comparison is rent for 5 then buy witha mortgage for 20 years or buy with mortgage for 25.

It actually falls down over this period because of tax and the difference in savings rates vs mortgage rates. But if prices wer flat, it is something like 5 years or when you get to 25% ish deposit that the renter actually needs negative prices to break even.

chucky

Procrastinator333 wrote: »

No because the comparison is rent for 5 then buy witha mortgage for 20 years or buy with mortgage for 25.

It actually falls down over this period because of tax and the difference in savings rates vs mortgage rates. But if prices wer flat, it is something like 5 years or when you get to 25% ish deposit that the renter actually needs negative prices to break even.

your repayments are higher then. i understand your logic but not convinced by it that's all.

what has more downside? the wait to see what happens then buy or the buy and be settled?

IveSeenTheLight

Chaos_A.D. wrote: »

To put some figures on this, ironically 40% of LL's for instance could not meet mortgage repayments if rates rose just 2%.

Conclusion - Stretch yourself now at your peril.

To clarify, the rates in bold above presumably on mortgage rates and not on BoE rates.
Presumably also in the context used above, it's a repayment rate and not the interest on the mortgage loan.
It would be good to see a link to this claim.

Also consider that the business model for BTL is such that it makes sence to have a higher mortgage and obtain a tax relief on the interest. The equity could then be utilised elsewhere.

I don't follow that model but explains why rented property mortgage interest may be so high and that the rents are close to the repayment loans.

Procrastinator333

Idiophreak wrote: »

It's not an informed decision, it's an educated guess. To hold off from buying a property for a year's tenancy in rental, you have to speculate on the housing conditions for the whole of that year. It's an educated guess, but still a guess - and if you're guessing, you're gambling.

Buying is just as much a gamble as not buying, just gives u different risks. By being aware of the financial implications u can make better decisions.

Most (as shown everytime I raise this point) are not aware of the fact thy if prices are flat and rent = mortghe interest, it makes no difference. You then need to form your own opinion on the direction of house prices and factor in the many other factors.

But there are many people who subscribe to the falacy that renting is dead money, wasted, without ever thinking it through.

Graham_Devon

There was actually some proper research done on renting vs buying.

Worked out that the break even point was 42 years (could have been 40, or 44, though think it was 42).

So basically you could rent for 42 years and break even with the homeowner. It was only after that point that the homeowner would start gaining on you and the renter would start falling backwards.

Was based on the figures when the research was actually done, but included stuff like legal fee's, insurance, repairs, maintanance. Basically all the stuff a mortgaged homeowner would have to pay for, that the renter would not have to pay for. It also included an average amount of moves, think it was 4 moves in total that they used, as every move will cost the mortgaged person a hell of a lot of money. Cost 10k to move? Well thats over a years rentals for the renter for example.

Not going to go hunting the research down, I'm sure we all know and accept that those buying do have extra costs, moving being the biggest one, and it's not good just comparing rent to a mortgage payment.