Tonight with Trevor McDonald

Gorgeous_George

When comparing rent vs mortgage, you need to factor in the other costs of owning a house.

Stamp Duty. People who buy usually move house more often than originally planned. In 21 years of home ownership, I've only had 4 houses. If my houses averaged £150K, that's £6,000 in stamp duty or £24 per month.

Estate Agents. Having sold 3 houses, I would have paidnearly £8,000 in EA's fees or £31 per month.

Solicitor's fees could add another £4,000or £16 per month.

That's £71 per month over 21 years and I think I haven't moved as often as many people do.

We haven't factored in house sales that fall through and the costs that these can incur.

I have a BTL and I have spent an average of £800 per year on various jobs. That's money that my tenant has saved because I'm reponsible for the repairs (mainly electrical, double glazing, plumbing). My tenants asked for a shower to be installed and I sorted it out. My tenants pay £80 per week to rent a 4 bedroom house.

Renting can be cheaper and much less hassle than owning. Let's get rid of the chip off peope's shoulders.



GG

gelato_cat

That's why I think it's funny when people say "I bought my flat for £150k five years ago and I'm selling it for £200k" or whatever. They forget about the amount of interest they've paid on the mortgage as well as all the other things you've mentioned!

Suze

Gorgeous_George wrote:

When comparing rent vs mortgage, you need to factor in the other costs of owning a house.

Stamp Duty. People who buy usually move house more often than originally planned. In 21 years of home ownership, I've only had 4 houses. If my houses averaged £150K, that's £6,000 in stamp duty or £24 per month.

Estate Agents. Having sold 3 houses, I would have paidnearly £8,000 in EA's fees or £31 per month.

Solicitor's fees could add another £4,000or £16 per month.

That's £71 per month over 21 years and I think I haven't moved as often as many people do.

We haven't factored in house sales that fall through and the costs that these can incur.

I have a BTL and I have spent an average of £800 per year on various jobs. That's money that my tenant has saved because I'm reponsible for the repairs (mainly electrical, double glazing, plumbing). My tenants asked for a shower to be installed and I sorted it out. My tenants pay £80 per week to rent a 4 bedroom house.

Renting can be cheaper and much less hassle than owning. Let's get rid of the chip off peope's shoulders.



GG

mystic_trev

Deleted_User wrote:

I watched this programme with interest last night. The fact is that if house prices keep rising, people at at the bottom of the ladder trying to buy their first home will simply be unable to.

That means the rest of the people on the ladder can't progress. The housing market then stagnates and house prices fall 'cos no one can move.

You're missing one crucial point which is still keeping the Housing market afloat i.e. BTL. Many BTL's are taking out loans on their homes with excessive "gearing" thinking that nothing can ever go wrong. When the housing market corrects these will be the first people to be badly effected and bankrupted. You just have to read Ms Saraya Beg's Debt Diary to get into the mindset of how stupid some of these people can be!

http://news.bbc.co.uk/1/hi/business/6047542.stm

"Granted, my finances were stretched and I was investing in buy-to-let property. But where else are you supposed to invest these days? Personal pensions, what with mis-selling scandals? "

lightspeed

Suzey wrote:

You're missing my point. The point was, she bought because she wanted something that was "hers". It's not "hers". Apart from the mortgage, she's still paying rent on part of it £130/month rent and £260/month mortgage if I remember correctly).

My parents didn't borrow more than three times their income and overstretch themselves. You're not comparing like with like. Yes, they have now paid it off, but I doubt the people on last night's prog will have paid theirs off within 25 years.

As long as renting is cheaper than mortgage repayments, which for many people it seems to be, then it makes more sense to rent.

Suze

I fully appreciate your take on this matter, however, what the programme did was take a few bad examples of individuals overstretching themselves to get on the property ladder and i reckon they are by no means the worst. However, I dont think that those 3 or 4 cases is a true reflection of what is going on nationwide and knowone can say otherwise until a more conclusive study is carried out. In 5 years time, we need to ask all FTB's who have bought in the past 12 months how they are doing, simple!

The girl in question may still be renting part of her flat but it is her choice and she appeared to be happy with that situation if not, she was putting up with it. To assume that these people will not have paid off their mortgage in 25 years is a complete guess and to fully understand todays mindset will will have to wait and see.

My point is that comments like "its not yours, its the banks" can be applied to all mortgage owners not just this select few who now aspire to get on the property ladder. I think the phrase "she wanted something that was hers" is been taken far too literally here.

We all like to have a place that we like to call home, those with a mortgage can justify comments like that more so than those renting because most actually own part of the property, those renting own none.

The couple of girls who splashed out 250K on a flat would be unheard of where i live, that would buy you a nice detached property. People may earn more down south but things certainly cost more. I may earn less up north but could spend less than 150K (where the multiples used are probably similar) and get a very nice home. In my eyes, the house may have increased a lot in value since 2000, but the mortgage payments are still within my reach and the property is still the type i would have chosen then = still good value for money (in todays market)

My logic is that if someone is prepared to pay 250K for a flat then this issue of unaffordable housing aint going anywhere soon. But then again i are'nt in the crazy London bubble.

25 years is a long time, during which we may see prices crash, we may see prices double, but there are always going to be those people that cannot budget and find themselves in difficulties. My guess is that these many of these people would be skint whether they had a mortgage or not, its just a frame of mind.

Gorgeous_George

mystic_trev wrote:

You're missing one crucial point which is still keeping the Housing market afloat i.e. BTL. Many BTL's are taking out loans on their homes with excessive "gearing" thinking that nothing can ever go wrong. When the housing market corrects these will be the first people to be badly effected and bankrupted. You just have to read Ms Saraya Beg's Debt Diary to get into the mindset of how stupid some of these people can be!

http://news.bbc.co.uk/1/hi/business/6047542.stm

"Granted, my finances were stretched and I was investing in buy-to-let property. But where else are you supposed to invest these days? Personal pensions, what with mis-selling scandals? "

BTLers maximise their borrowinga gainst property to fund other BTL purchases and to minimise the tax liability from the rental income.

It's not rocking horse science that anybody with a lot of properties will suffer the most in the event of a crash in house prices. The astute BTLer will have factored potentials falls in house prices, as well as potential rises, into their risk budgets. I agree that many may not be so astute. Similarly, people who invest in other streams have risks. Shares can go down as well as up.

I do not agree that BTLers are significantly responsible for house price inflation.



GG

Jim_B_3

Gorgeous_George wrote:

I have a BTL and I have spent an average of £800 per year on various jobs. That's money that my tenant has saved because I'm reponsible for the repairs (mainly electrical, double glazing, plumbing). My tenants asked for a shower to be installed and I sorted it out. My tenants pay £80 per week to rent a 4 bedroom house.

Good move. When I look for somewhere to rent I make it clear I won't even consider it if it doesn't have a big chunky shower with decent pressure and a shedload of hot water. I understand I'm not alone in this requirement, yet landlord after landlord decide to 'save' money by not installing one.

gelato_cat

Yes, she did make the choice but I don't believe it was a very informed one. I got the impression that she didn't know she'd only be left with £25/week, as she didn't seem to realise she'd have to pay council tax and the like until she received the bill.

Not to mention the payments for the famous leather sofa

Suze

garry_s wrote:

God - you are a cheery bunch. If people wish to take out a huge mortgage and live off £25 per week and work part time as a barmaid then that is up to them. It is their free choice. I say - good luck to them. I've worked all my life full time as well as part time and had huge mortgages. It was better than living in a property owned by some whimisical landlord. It is up to that person to decide the standard of life they wish to have. If they need to work but neglect their children then they need to seriously consider whether it is worth such a sacrifice.

gelato_cat

lightspeed wrote:

I fully appreciate your take on this matter, however, what the programme did was take a few bad examples of individuals overstretching themselves to get on the property ladder and i reckon they are by no means the worst. However, I dont think that those 3 or 4 cases is a true reflection of what is going on nationwide and knowone can say otherwise until a more conclusive study is carried out. In 5 years time, we need to ask all FTB's who have bought in the past 12 months how they are doing, simple!

I agree. I think there are certain areas where people are doing this and other areas where places are still fairly affordable. I know a lot of people who are emigrating and most of them are having trouble selling their houses, so there's obviously more supply than demand in some areas.

lightspeed wrote:

The girl in question may still be renting part of her flat but it is her choice and she appeared to be happy with that situation if not, she was putting up with it.

Hmmm. I still think she didn't really grasp the concept though. I mean, why say renting is dead money and then go on to rent a third of the property or whatever it was? Why not buy a cheaper place and have a mortgage on the whole lot instead?

lightspeed wrote:

To assume that these people will not have paid off their mortgage in 25 years is a complete guess and to fully understand todays mindset will will have to wait and see.

Yes - I said this because the previous poster made a comment about the older generations' mortgages and I was pointing out you can't compare FTBs now with FTBs 25 years ago.

lightspeed wrote:

My point is that comments like "its not yours, its the banks" can be applied to all mortgage owners not just this select few who now aspire to get on the property ladder. I think the phrase "she wanted something that was hers" is been taken far too literally here.

Maybe. She said renting is dead money and she wanted something that was hers. She's still renting part of it. That's what I'm basing my comments on.

lightspeed wrote:

We all like to have a place that we like to call home, those with a mortgage can justify comments like that more so than those renting because most actually own part of the property, those renting own none.

Most do, yes. Not if their mortgages payments are interest-only though.

lightspeed wrote:

The couple of girls who splashed out 250K on a flat would be unheard of where i live, that would buy you a nice detached property. People may earn more down south but things certainly cost more.

London is ridiculous. People do earn more, but not loads more. The girls on the prog were on less than £25k each, which is low for London. I can't remember whether or not what they said their monthly repayment was.

lightspeed wrote:

My logic is that if someone is prepared to pay 250K for a flat then this issue of unaffordable housing aint going anywhere soon. But then again i are'nt in the crazy London bubble.

Yep, the value of something is only what people are prepared to pay for it.

lightspeed wrote:

25 years is a long time, during which we may see prices crash, we may see prices double, but there are always going to be those people that cannot budget and find themselves in difficulties.

The girl with £25/week disposable will find that wiped out if/when interest rates rise :eek:

lightspeed wrote:

My guess is that these many of these people would be skint whether they had a mortgage or not, its just a frame of mind.

Possibly... it was obvious from the comments that the girls made on the prog that they weren't too savvy about some aspects of what they'd got themselves into. I can well imagine that the two in London have other debts unless they are spending all their spare time inside their nice new flat, in which case what's the point of living in London?

Suze

Phirefly

How frustrating! I wish I'd seen it! Or actually maybe not as it would probably just have made me cross.

I get as exasperated as the next person about the materialistic must-have-it-now attitude that prevails among my generation. I also think that individuals are misguided if they think that maxing out just 'ooh so I can say its mine' is a good idea. But all this HPC propaganda and purveyors of doom are really getting my back up with the over-generalisation.

My Dad watched the show in horror, knowing his youngest (yours truly) is about to take the leap herself. He has no idea just how much his 'can't afford it - don't have it or save for it' doctrine has rubbed off on me, and couldn't begin to know just how much research/planning and saving has gone into my decision to buy my first property. Now he's totally freaked out and he and thousands like him are now gripped with HPCer mentality and this is unhealthy. All this property !!!!!! theory gets my back up, maybe a deluded few are seduced by the mystical pull of covering their world with laminate flooring, but the vast majority of us just want to live somewhere that really feels like home.

I read UKbondraiders post with interst, as I agree with him on many points. I agree that those on a 'lower' wage should just tighten their belts and get real. But I find myself just outside that bracket, and its the likes of me and my boyfriend, earning a decent living but not setting the world alight financially just yet are the most marginalised. We're just on the cusp of being able to comfortably afford to buy our first property. We've rented for two years and saved like mad. I sold my beloved Mini Cooper toy and now drive around in a modest clio so I could boost my savings, we didn't get our furniture on a rediculous buy now pay later whim, we bought the very same DFS sofa we wanted, brand new, from ebay for a third of the RRP and paid up front. Yeah it was a pain in the a** collecting it, but it saved us £400.

The kind of property we are looking for is going to cost just over a third of our joint takehome a month, its going to be a stretch, but I think we can do it. I hate all this rubbish about being branded 'mad' to buy now. I wasn't in a position to buy 5 years ago when it would have been wiser, I've no choice, its NOW that I want to buy. Why should we continue to live in our rented accomodation that has suited us well up to now, but that we cant improve without upping our rent or moving somewhere else? I would like to invest in some storage solutions, but I'm not paying for quality cupboards to fit in a transient home. I'd really like nice carpets to my taste, is that so rediculous a desire for someone earning less than 30k? People shouldn't be denigrated for wanting to own their own home. Every case is individual and the generalisations made by those who subscribe to the HPC school of thought aren't helping anyone.

Pobby

Shared equity is fine apart from one thing.A friend of mine,mid 50s,bought a half share of his house in the 80s.Think his contribution was £17k.The house is now valued at £170k.To own the house outright he will now have to pay a further £62k!!!!!!!!!!!!!!!!!!!!!!!!!!!!!