Mortgage now Cheaper than Rent in 80% of the UK

Cleaver

I've just realised, we got ourselves the making of a good ol' fashioned renting vs buying thread! Ye haw!! The most pointless and pathetic thread we do as a forum and, let's face it, we are the kings and queens of sh*t, pointless and pathetic threads.

Right, I'll start in the favour of... erm, well, I think I'll go for renting, as I went for buying last time. Okay...

Ladies and gentlemen, renting is way better than buying. It's cheaper per month than buying and interest rates won't stay long for ever. Someone else pays for your boiler to be fixed. I have the freedom to move wherever I like. I don't have to worry about repairing my roof. I don't have to worry about house price falls. I could never afford the house I'm in to buy.

Okay, that's me done for now. Someone else chosing buying as the best thing ever, give me your bullet points, then we'll call each other c*nts for 8 pages.

Graham_Devon

Cleaver wrote: »

A 3-bed semi on Hays Road in Prestwich, Manchester for rent at £750 a month.

A 3-bed semi on Hays Road in Prestwich, Manchester for sale at £159,950.

Let's say you got a mortgage for around £140,000 on the house at 6%, your monthly repayment would be about £700 a month interest only. That seems pretty much the same as the rent to me.

This is a road quite near me and the first one I looked at for a comparison.

Add on 2-3k in fee's, and it will take 5 years for renting to become the cheaper option.

Add on buildings insurance, maintanance etc, mortgage fees, and it will take even longer.

The research is still valid....just a bit basic, thats all, and just says something about a point in time, and that poitn in time is right now, and highly volitile to change.

Herbie_Hancock_I_wish

Please be aware that the BOE rate is 0.5%. For years it averages a little over 8%. Not saying that 8% is around the corner but as soon as we are on the move again I can certainly see 5% ( historically low ) a possibility.

Cleaver

Graham_Devon wrote: »

Add on 2-3k in fee's, and it will take 5 years for renting to become the cheaper option.

Add on buildings insurance, maintanance etc, mortgage fees, and it will take even longer.

And someone else fixes your boiler. You missed that one.

Look, this is why these threads are pointless. We could all throw in about a gazaillion scenarios. I could say that in that 5 years the house will grow in value by 40%, thus making you loads of money. Etc. etc. etc.

I'm just simply saying that in this case, simple monthly rent is the same as simple monthly mortgage interest on pretty much the same property in the same road.

halight

Torchboy wrote: »

Mortgage are for 25+ years. Interest rates won't stay this low for the next 25 years. When they inevitably go up then renting will be cheaper than a mortgage. So your attitude seems rather short-sighted to say the least.

I think your find that if IR go up then the rents on houses wll start to go up as well. I think this is what happend in the 1980s and the 1990s.

Please put me right if im wrong

vaporate

Either buy a house, risky with interest rates and NO jobs about, or crap pay no matter how well qualified, experienced you are.

Or just save like a demon and leave the dough to the next nearest relative after your buried and pushing up daises lol

Cleaver

Torchboy wrote: »

Mortgage are for 25+ years. Interest rates won't stay this low for the next 25 years. When they inevitably go up then renting will be cheaper than a mortgage. So your attitude seems rather short-sighted to say the least.

Erm, isn't there a bit of a hole in your argument?

Let's say I get a £150,000 mortgage right now for the next 25 years. An SVR product, for sake of argument. Over the next 25 years it would be safe to assume, based on history, that this mortgage is going to cost me 3% at some points and probably up to 12% at some points. Let's say I pay an average of 7% over the 25 year period.

3% = £717 a month
7% = £1072 a month
12% = £1593 a month

So maybe an average of £1072 every month for 25 years?

Let's say the rental on the property is £717 a month right now. You'd have to assume that rental roughly follows inflation, so let's say 2% a year for the next twenty five years. Your rent would be:

2010 = £717 a month
2020 = £819 a month
2035 = £1,119 a month

Not really much in it is there? Aside from the fact that in 2035 you'll own your house and suddenly have nothing to pay, whereas if you were still renting the place you'll have to still find over £1000 a month.

HAMISH_MCTAVISH

Cleaver wrote: »

This is a road quite near me and the first one I looked at for a comparison.

In Aberdeen....

2 bed flat-- rent £745 per month.
http://www-r.aspc.co.uk/cgi-bin/public/LiveProperty/284957?ID=FMAMFPCD#picture

That same flat was bought for £113,000 in late 2006.
http://www.zoopla.co.uk/house-prices/aberdeen/headland-court/?sold_price_years=5&sold_price_types=all&pn=2

That's a yield of 8%.....

And a neighbouring 2 bed flat sold for £133,000 in July this year, which would be a yield of around 7%.

Obviously far more expensive than even the worst of mortgages.

getmore4less

Cleaver wrote: »

A 3-bed semi on Hays Road in Prestwich, Manchester for rent at £750 a month.

A 3-bed semi on Hays Road in Prestwich, Manchester for sale at £159,950.

Gross yields £750*12/£160k = 5.625%

Thats the starting comparitor.

Then as a owner add in your costs of ownership that you don't get with renting probably 1% a year long term for stuff that needs fixing.

So as a new borrrower with high LTV requirements( a lot of renters) you are probably around break even(on interest only).

Pro landlords have targeted 10% gross yields to make money long term so the low rental yield reflect the low interest environment.

Those that have secured the low rates are better owning but for most entering the market the renting/buying will be a close call reflecting the ballance that tends to be there, places get to cheap rents go high landlords start buying up the stock and redress the ballance.

yields drop as prices rise landlord offload their duff stock into the boyant market for someone else to pay the bills.

Cleaver

getmore4less wrote: »

Gross yields £750*12/£160k = 5.625%

Thats the starting comparitor.

Then as a owner add in your costs of ownership that you don't get with renting probably 1% a year long term for stuff that needs fixing.

So as a new borrrower with high LTV requirements( a lot of renters) you are probably around break even(on interest only).

Pro landlords have targeted 10% gross yields to make money long term so the low rental yield reflect the low interest environment.

Those that have secured the low rates are better owning but for most entering the market the renting/buying will be a close call reflecting the ballance that tends to be there, places get to cheap rents go high landlords start buying up the stock and redress the ballance.

yields drop as prices rise landlord offload their duff stock into the boyant market for someone else to pay the bills.

Indeed. I was just posting something in response to another poster who said that there wouldn't be houses that you could buy for the same per month as renting, so these were just to show that there are.

I wasn't making a judgement call as to whether one is 'better' than the other or whether it's a good investment.