Better to buy than rent!!

abaxas

benb76 wrote: »

I love these threads, there are always so many unsubstantiated anecdotes of rental bargains costing the equivalent of 2% or less! I used to rent my place out, and the annual rent was around 5% of the value and I never had any voids in the 3.5 years I was letting it. I must have been lucky seeing as I seemed to have been charging twice the going rate if you believe what you read on here!

This site is called 'Money Saving Expert'. Maybe that is a large enough hint for you?

RenovationMan

benb76 wrote: »

I love these threads, there are always so many unsubstantiated anecdotes of rental bargains costing the equivalent of 2% or less! I used to rent my place out, and the annual rent was around 5% of the value and I never had any voids in the 3.5 years I was letting it. I must have been lucky seeing as I seemed to have been charging twice the going rate if you believe what you read on here!

Its great fun. People renting 6 bed mansions for the price of a pint of beer. People aged 30 buying 6 bed mansions for cash with no hint to how they amassed such a fortune. This board is brilliant!

chucknorris

RenovationMan wrote: »

Its great fun. People renting 6 bed mansions for the price of a pint of beer. People aged 30 buying 6 bed mansions for cash with no hint to how they amassed such a fortune. This board is brilliant!

I'm just nipping out to buy a golf club for £300 as a Xmas present for my wife (maybe you have heard of this club before - Glen eagles)

the.ciscokid

For me, it is better to rent (and save) than it is to buy a house that I would be interested in purchasing.

I spend 1300 per month on rent.
The house I live in was bought for £305K in 2000, and has since had a loft conversion, and extension. (4 bed detached house in Herts).
It is, I will admit, not to my tastes from the point of view of bathroom suite and carpets, but it is clean, tidy and functional, and above all in a fantastic area.
The house next door is currently undergoing extension and loft conversion to make it a similar size to ours, and sold in 2006 for £425K, all prices are taken from the land registry website.

Based on this, and the fact that a property sells very quickly in this area (I will never be able to afford to live in the same area, unless I become a bankster) I would estimate the current market value is around £550K, and I consider this to be very conservative... it is likely to be far more.

The gross yield on this house therefore is %. Taking into account agency fees, voids, and repairs, I assume this is more like <2% net.

The top end of the market offers some great places for renters. The lower end awful flats and so on will have higher yields I imagine, since housing benefit adds an artificial floor to the prices.

LittleMissAspie

There's far too many numbers on this thread for my flu-addled brain. So I will just say that whether renting or buying is best totally depends on lots of circumstances. It depends on the price of houses, price of rents, your income, your deposit, mortgage interest rates, savings interest rates, direction of house prices, direction of rent prices, the timescale you're looking at etc etc. There is no absolute "buying is better" or "renting is better".

We started saving for our deposit in 2006 so we were clearly better off renting then otherwise we would have bought at the peak and would possibly now be in negative equity. Renting for longer and moving into a not-very-nice but cheap rental allowed us to save a 25% deposit. Now we've bought and our interest is £250 per month. The week we moved, two houses in our street were up for rent. Same size and layout and they were up for £650 per month. So we are now better off buying.

I'm actually keeping a spreadsheet of our buying/mortgage/repayment costs vs the cost of renting the house down the road. My experiment won't really be complete until we've paid off the mortgage but I'm sure the bull and bear arguments will still be going on then!

Batchy

nembot wrote: »

No subsidising at all Batchy, it's just what properties in rural North Wales go for - not a bad price to be fair for a barn conversion with beautiful views and a nice garden.






I believe this property and a few others are owned outright by the landlord, so they're after decent tenants in the most part. Obviously in another location, the rent would be much closer to market rate.

[edit] it's an extra 5 miles from work, have 12 miles each way now - but at least most of the roads are 60mph.

Thanks... looks lovely!

I met someone recently involved with my solicitors on the purchase of my house, who lived in wales and travelled each day... 2 hrs each way min... I thought he was mad and he actually corrected me only worked from office 2 days and always mixed it with visiting/ staying with friends locally. So only one journey per week, worked rest of the time from home.

Cheap and this lifestyle suits him down to the ground... however for some location close to work is important. I couldnt imagine the pain 4 hours per day commute minimum would give me in addition to a working day!

LittleMissAspie

abaxas wrote: »

Penistone (silly name) - marketed at £250,000, agreed rental of £500 pm as owner was working in the gulf for 18 months. Aborted as we were moving to Newcastle.

Previous place in Tyne valley, £525 pm, marketed at £220,000

North Sheffield (prior to moving to Newcastle) £430 pm, house price site said property was bought (new build) for £185,000.

Now that is VASTLY different to around here (Cambridge).

Our not-very-nice but cheap rental I mentioned was bought for £137k in 2006, and our rent was £630. That was one of the cheapest 1-bed houses we could find and we looked for ages.

One of the houses down the road that was up for rent at £650 sold in 2008 for £145k. 2-bed mid terrace.

My dream house is currently up for both sale and rent, sale price £300k and rental price £850. 2-bed detached cottage.

Which just goes to show that there is no absolute answer to all this.

Batchy

the.ciscokid wrote: »

For me, it is better to rent (and save) than it is to buy a house that I would be interested in purchasing.

I spend 1300 per month on rent.
The house I live in was bought for £305K in 2000, and has since had a loft conversion, and extension. (4 bed detached house in Herts).
It is, I will admit, not to my tastes from the point of view of bathroom suite and carpets, but it is clean, tidy and functional, and above all in a fantastic area.
The house next door is currently undergoing extension and loft conversion to make it a similar size to ours, and sold in 2006 for £425K, all prices are taken from the land registry website.

Based on this, and the fact that a property sells very quickly in this area (I will never be able to afford to live in the same area, unless I become a bankster) I would estimate the current market value is around £550K, and I consider this to be very conservative... it is likely to be far more.

The gross yield on this house therefore is %. Taking into account agency fees, voids, and repairs, I assume this is more like <2% net.

The top end of the market offers some great places for renters. The lower end awful flats and so on will have higher yields I imagine, since housing benefit adds an artificial floor to the prices.

I dont understand you will never be able to buy, BUT in 2035 when rents on your road are probably in excess of £2600pm what are you going to do... WHEN YOU RETIRE ... what pension provisions have you put in place to pay £2600pm... do you know how much of a fund you will need in place to pay for this IN 2035 FOR EXAMPLE... I have a good idea, and would expect it to be around £750,000 aged 65 ish should just about give you the net income you need, plus RPI GROWTH over the rest of your remaining life to remain there...

I would have thought erm about 14-20k per annum rising in line with RPI per annum contributions and some good growth over 25 years would just about see that achieved.

Oh then you have to worry about your actual pension fund to live on... erm... and of course the 1300 per month in rent during that time.

God I hope you earn a lot!

abaxas

LittleMissAspie wrote: »

Now that is VASTLY different to around here (Cambridge).

Our not-very-nice but cheap rental I mentioned was bought for £137k in 2006, and our rent was £630. That was one of the cheapest 1-bed houses we could find and we looked for ages.

One of the houses down the road that was up for rent at £650 sold in 2008 for £145k. 2-bed mid terrace.

My dream house is currently up for both sale and rent, sale price £300k and rental price £850. 2-bed detached cottage.

Which just goes to show that there is no absolute answer to all this.

Exactly my point, the market dictates the price, not the LL.

I cant comment on the Cambridge market, but from your figures, it does look like a right pain in the bum!

One thing I would recommend is longer term contracts, also if you dont insult with your first offer, it's now low enough.

Expect 10% for 12 months, 15% for 18 month contract. If the LL wont do it, move away, as they are best avoided.

abaxas

Batchy wrote: »

I dont understand you will never be able to buy, BUT in 2035 when rents on your road are probably in excess of £2600pm what are you going to do... WHEN YOU RETIRE ... what pension provisions have you put in place to pay £2600pm... do you know how much of a fund you will need in place to pay for this IN 2035 FOR EXAMPLE... I have a good idea, and would expect it to be around £750,000 aged 65 ish should just about give you the net income you need, plus RPI GROWTH over the rest of your remaining life to remain there...

I would have thought erm about 14-20k per annum rising in line with RPI per annum contributions and some good growth over 25 years would just about see that achieved.

Oh then you have to worry about your actual pension fund to live on... erm... and of course the 1300 per month in rent during that time.

God I hope you earn a lot!

We've been through this before.

They wont save as it isn't cost effective. Ie others will pay for their rent via the tax system/housing benefit.

Please compare like with like here.