anyone else want a CRASH...?

cwcw

Alan_M wrote:

IO mortgage @ 5% approx £500 pm
Rent = £270.

That's a no brainer.

It's not really a fair example though because the local HA owns it so rent is bound to be much lower. Exercising RTB with a discount from market value (if available) could definitely be in their interest. So, on that example, you can knock the Cambridgeshire off the list I reckon, until there's a fairer example.

lynzpower

Alan_M wrote:

IO mortgage @ 5% approx £500 pm
Rent = £270.

That's a no brainer.

So far we have : all the same pattern

North London
Surrey
Whitley Bay
Cambridgeshire

Keep them coming, 4 doesn't exactly prove anything.

you forgot me in east london,

the house we are moving Into I expect would cost somewhere in the region of 320k

rent is 730pcm

can you do that maths for me, Ive got a killer hangover

cwcw

Here's another example, with referenced properties as evidence:

Rent:

http://www.blundells.co.uk/rentaldetail.asp?rentalID=646

3 bed terraced house in Crookes, Sheffield: £595 pcm


Buy:

http://www.vebra.com/home/search/vdetails.asp?src=vebra&fd=0&bd=1&db=1&cl=416&pid=11219075

3 bed terraced house in Crookes, Sheffield: £158,000

-10% deposit = £142,200 mortgage (4.89%):

Interest only: £577 a month
Repayment: £818

manhattan

cwcw wrote:

It's not really a fair example though because the local HA owns it so rent is bound to be much lower. Exercising RTB with a discount from market value (if available) could definitely be in their interest. So, on that example, you can knock the Cambridgeshire off the list I reckon, until there's a fairer example.

RTB not available been there, done it, and got told to go away! lol

there are 7 HA houses in this street the rest are privately owned.all 7 rents are similar.

cwcw

manhattan wrote:

RTB not available been there, done it, and got told to go away! lol

there are 7 HA houses in this street the rest are privately owned.all 7 rents are similar.

Yes but renting from the council/ housing association is much cheaper than renting privately from a landlord (usually almost half the price).

Alan_M_2

All your showing is breakeven with a lump sum injection of £15,000 +

Remove the lump sum injections then your figures will be like for like.

i.e. If I'm going to rent that place, I don't have inject £15K into it do I?

Then if you want genuine comparisons, factor in solicitors fees, stamp duty etc. Otherwise we're not comparing like for like are we.

Alan_M_2

lynzpower wrote:

you forgot me in east london,

the house we are moving Into I expect would cost somewhere in the region of 320k

rent is 730pcm

can you do that maths for me, Ive got a killer hangover

Interest only on £320K @ 5% = £1,350 approx.

cwcw

Alan_M wrote:

All your showing is breakeven with a lump sum injection of £15,000 +

Remove the lump sum injections then your figures will be like for like.

i.e. If I'm going to rent that place, I don't have inject £15K into it do I?

Then if you want genuine comparisons, factor in solicitors fees, stamp duty etc. Otherwise we're not comparing like for like are we.

But I'm working on the assumption that the lump sum is available, which can either be used by stashing it in a savings account at, at best, 4.25% net interest per year, or using it for equity in a property, at 8% local annual growth.

You're right about the solicitors fees/stamp duty, etc, but renting and buying can never be truly like for like. Where buying has the fees associated, renting has intangible costs like possible upheaval every 3 - 6 months, not being able to alter/decorate your home to your own taste, etc.

Alan_M_2

What we're trying to show here is that for the FTB today the difference between buying and renting is quite marginal, in some areas poor and in other breakeven.

5 years ago buying was an absolute no brainer, that's not the same situation FTB's face today.

Also you can't factor house price inflation figure into this either, unless you have a crystal ball that is.

Alan_M_2

Lets take this to the other extreme and assume you don't need a mortgage to buy, that you have the money on deposit, we'll take two examples, my circumstances and one ofyour examples we'll even ignore stamp duty and solicitors fees to make this simple:-

My situation.

£250,000 house - rent £800 pm

pay in full in cash - no monthly outgoing.

To rent:-

£250,000 on deposit at 5% - income £1,050 pm - rent £800 - surplus £250 pm. + no fees, no stamp duty. no maintainance.



3 bed house in sheffield at £158,000 rent £595pm

£158,000 on deposit @ 5% £660pm - surplus £65

No fees, no stamp duty, no maintainance, zero risk of fluctuation or increase in capital.



What does this prove? Well the figures are horribly simplified, there's all sort of tax ramifications to consider, but it's very simple way of showing how out of whack house values are with expected rental income.

Rent is real, it is directly related to income and the ability and willingness of people to pay it, house prices have become detached from this and fundmentally become another speculation medium.

The incentive to buy today isn't anywhere near what it was 5 years ago, or even 2 years ago...in most cases you're break even, best case scenario, your house increases in value - your capital increases, but the opposite could happen, or neither.