Is renting really more expensive than buying?

Procrastinator333

wotsthat wrote: »

Don't start showing off yet. There'll be someone along in a minute to tell you that your tenant is the clever one.

I think that one point both sides neglect is that BOTH the tenant and the landlord can be making the best choice at the same time. They are not mutually exclusive. £1,100 rent on £95 interest. Would be hard pushed to argue istl should be selling up.but on the flipside, istl's tenant may have only a 10% deposit and be starring down the barrel of 6% interest rates if they buy. The mortgage for them might be £1,250 a month.

My ll has no mortgage, is making a good return. I would not sell if I were them. But equally, as a tenant, the mortgage would cost more than the rent and I see prices falling. So I think I'm quids in by delaying a purchase. Both sides can be making opposite decisions, but both be right at the same time.

Out,_Vile_Jelly

IveSeenTheLight wrote: »

Is your intention to always rent whilst in London then?
Do you have intentions ever to buy?

I will only be able to buy in London if I meet someone and have a dual income, or inherit a huge wedge (neither look particularly likely).

Could move outside London, but that would involve a major personality and lifestyle change and the lure of a mortgage isn't strong enough to sway me.

IveSeenTheLight

Procrastinator333 wrote: »

Would be hard pushed to argue istl should be selling up.

I have no intention of selling up and certainly I am currently benefitting on the low interest rates, something which is helping to pay down the capitol at an increased rate and dramatically reduces the amortization period.

I will get to the point were there is £0 mortgage interest and a likely increase in rents received (I won't put them up till a change of tenants but the property is already rented under market value).

My properties are on a long term strategy, so I'd have to receive an offer I could not refuse before I chose to let them go.

twadge_face

Procrastinator333 wrote: »

I think that one point both sides neglect is that BOTH the tenant and the landlord can be making the best choice at the same time. They are not mutually exclusive. £1,100 rent on £95 interest. Would be hard pushed to argue istl should be selling up.but on the flipside, istl's tenant may have only a 10% deposit and be starring down the barrel of 6% interest rates if they buy. The mortgage for them might be £1,250 a month.

Nail. Head. Hit.

That is precisely the FTBs' dilemma.

Combine that with tight lending policies where any deposit of less than 20% is viewed with great suspicion and/or scrutiny with regard to the property's potential to retain its value and the borrower's potential to default we can see two possibilities:

1. Banks are broadly concerned a 20% nominal drop might happen across the board.

2. Banks fully expect interest rates to go up and thus crush affordability.

My ll has no mortgage, is making a good return. I would not sell if I were them. But equally, as a tenant, the mortgage would cost more than the rent and I see prices falling. So I think I'm quids in by delaying a purchase. Both sides can be making opposite decisions, but both be right at the same time.

Sounds pretty reasonable and sensible.

What I think is ludicrous are the simple-minded folk who say I'm paying a 50p mortgage and getting £1250 rent, aren't I the clever one you renting muppetoids.

The reality is this game has some time to play out.

IveSeenTheLight

!!!!!!_face wrote: »

What I think is ludicrous are the simple-minded folk who say I'm paying a 50p mortgage and getting £1250 rent, aren't I the clever one you renting muppetoids.

Who are these simple-minded folk that have used this terminology of their tenants?

chucky

!!!!!!_face wrote: »

1. Banks are broadly concerned a 20% nominal drop might happen across the board.

2. Banks fully expect interest rates to go up and thus crush affordability.

really?? 100% guaranteed??

!!!!!!_face wrote: »

Sounds pretty reasonable and sensible.

i'm sure it is to you but it doesn't mean that it's true or even going to happen

Batchy

100% guaranteed it MIGHT happen

of course rates will go up, they cant exactly go any lower!!

twadge_face

chucky wrote: »

really?? 100% guaranteed??

OK, what's your take on it?

chucky

!!!!!!_face wrote: »

OK, what's your take on it?

margins on lending is currently about 3% with about 50k approvals, in peak times margin on lending was smaller as there was a higher volume 80k-90k. it all depends on what the future mortgage approvals will be.

my view is that BOE rate will go up, mortgage rates will go up slightly and lending margins will reduce with no major impact on mortgage rates. at this point the correlation between Libor, BOE rate and mortgage rates will return.

twadge_face

chucky wrote: »

margins on lending is currently about 3% with about 50k approvals, in peak times margin on lending was smaller as there was a higher volume 80k-90k. it all depends on what the future mortgage approvals will be.

OK, so the margins are higher, that's because banks are recapitalising, right? At the same time only really lending to those with large deposits, hence minimising their own exposure to nominal drops.

my view is that BOE rate will go up, mortgage rates will go up slightly and lending margins will reduce with no major impact on mortgage rates. at this point the correlation between Libor, BOE rate and mortgage rates will return.

Sounds like a pretty innocuous brew for stagnation...