Why is it that people are so desperate to own houses?

warehouse

Renting costs £300 more per month than my mortgage.

I like to do what I want with my property.

Not at the beck and call of a landlord.

Security.

Stability.

Investment.


That'll do for now.

B_Blank

People want to own because rental in this country sucks. The rights of tenants are neglected and so buying is preferable

FATBALLZ

Tenants are treated like 5h1t. If renting was cheap and secure, and you had rights to enforce things like repairs, and were able to decorate - ie the European model of renting, I would much prefer to rent. Being over £100k in debt and the hassle of maintaining a house doesn't appeal to me, but it's better than the alternative in the UK.

I'm hopeful that in future as the 'priced out' generation grows in voting power, rentals in this country will become more attractive and tenants rights will be increased. I'd hate for my kids to have to go through the !!!!!! experience of private rental that I had to deal with.

Loughton_Monkey

Actually, the figures are quite scary. I've never really worked it out since instinctively, buying is far cheaper than renting in the long run. But I thought I'd establish by how much!

Very easy to work out on a spreadsheet. Here's what I did:

1. Take a 28 year old, who I have assumed has been earning long enough to have put down £25K deposit on a £175K house. Hence a mortgage of (say) 6% - OK, high, but I'm trying to get an average. Monthly repayments would be £977.84 a month for 25 years.

2. I assumed a cautious life expectance of around 85. I also assumed annual 'ownership' cost of £1,750 a year, inflated by 4% a year, right up to age 85. I also took into account loss of interest (3%) on the original deposit of 3% on £25K (that's £750 a year).

3. Adding this up over the 58 years of ownership, you get - in £ notes - a total cost of £718,614. But deflate it all by 4% per annum and in 'today's' values, that's £309,640). After 25 years, of course, this person owns a house valued (in today's terms) £175K, so in today's money, it has cost £135K in mortgage interest, loss of deposit interest, and ownership costs.

4. Renting is easy, except I haven't (personally) got a clue about rental costs for a £175K home. I assumed £1,000 a month, despite an 'all property' average of £1241 a month. But assuming rents go up with inflation, then it's still £12K a year in today's terms. For 58 years, then, it's £696K

Phew! What a difference! In today's money, shelling out nearly £700K instead of £135K is no comparison is it? In actual £ notes, the buyer shells out £718,614, while the renter shells out £2,617,796.

I re-did the thing with much 'stronger' costs of buying. I put average mortgage rate up to 8%, assuming a 4% loss of interest on the deposit, and I increased the annual costs of ownership (for 58 years) to £2,500. Then I calculated what the starting rent (today's values) would have to be to equalise the total costs to age 85. This came out at a totally unrealistic £318 a month. In my more realistic first example, the renter would have to start paying rent of only £193 a month to be 'equal'.

It strikes me that this is an extraordinary additional price to pay for 'freedom from ownership', more mobility, or whatever other 'benefits' people see in house ownership.

FATBALLZ

Loughton_Monkey wrote: »

Actually, the figures are quite scary. I've never really worked it out since instinctively, buying is far cheaper than renting in the long run. But I thought I'd establish by how much!

Very easy to work out on a spreadsheet. Here's what I did:

1. Take a 28 year old, who I have assumed has been earning long enough to have put down £25K deposit on a £175K house. Hence a mortgage of (say) 6% - OK, high, but I'm trying to get an average. Monthly repayments would be £977.84 a month for 25 years.

2. I assumed a cautious life expectance of around 85. I also assumed annual 'ownership' cost of £1,750 a year, inflated by 4% a year, right up to age 85. I also took into account loss of interest (3%) on the original deposit of 3% on £25K (that's £750 a year).

3. Adding this up over the 58 years of ownership, you get - in £ notes - a total cost of £718,614. But deflate it all by 4% per annum and in 'today's' values, that's £309,640). After 25 years, of course, this person owns a house valued (in today's terms) £175K, so in today's money, it has cost £135K in mortgage interest, loss of deposit interest, and ownership costs.

4. Renting is easy, except I haven't (personally) got a clue about rental costs for a £175K home. I assumed £1,000 a month, despite an 'all property' average of £1241 a month. But assuming rents go up with inflation, then it's still £12K a year in today's terms. For 58 years, then, it's £696K

Phew! What a difference! In today's money, shelling out nearly £700K instead of £135K is no comparison is it? In actual £ notes, the buyer shells out £718,614, while the renter shells out £2,617,796.

I re-did the thing with much 'stronger' costs of buying. I put average mortgage rate up to 8%, assuming a 4% loss of interest on the deposit, and I increased the annual costs of ownership (for 58 years) to £2,500. Then I calculated what the starting rent (today's values) would have to be to equalise the total costs to age 85. This came out at a totally unrealistic £318 a month. In my more realistic first example, the renter would have to start paying rent of only £193 a month to be 'equal'.

It strikes me that this is an extraordinary additional price to pay for 'freedom from ownership', more mobility, or whatever other 'benefits' people see in house ownership.

That's a bit simplistic, you've missed off costs like maintenance and costs of moving, which probably aren't huge but do even things up a little bit. I think your rental figures are way off, unless you are just talking about London only. The last place I rented was bought for £155k but I paid £500 a month for it.

It's pretty obvious that after a certain period, ownership becomes cheaper, so it probably makes more sense to say, 'after X years ownership makes more financial sense', rather than 'ownership is a better deal'.

Graham_Devon

ukcarper wrote: »

I agree with most of what you posted but who is going to provide these properties. There is nothing stopping companies buying or building properties and letting them out on the terms you want but nobody seems to want to do it.

Why would anyone want to do it when you can get away with so much less?

What's in it for the landlord? Nothing.

B_Blank

FATBALLZ wrote: »

Tenants are treated like 5h1t. If renting was cheap and secure, and you had rights to enforce things like repairs, and were able to decorate - ie the European model of renting, I would much prefer to rent. Being over £100k in debt and the hassle of maintaining a house doesn't appeal to me, but it's better than the alternative in the UK.

I'm hopeful that in future as the 'priced out' generation grows in voting power, rentals in this country will become more attractive and tenants rights will be increased. I'd hate for my kids to have to go through the !!!!!! experience of private rental that I had to deal with.

Private rental really is a bit.ch. The agents think they can come round and show people round when you still live there. That shouldnt be allowed for a start. Its like if you rent a car they shouldnt be able to come and test drive it whilst you are still paying for it.

Secondly, you shoulld be able to rent a place and do any decorating you want to it. For examp,e you should be able to hang a pitcure on the damn wall without asking.

Inspections shouldnt be allowed. I mean who the fck do they think they are. Your paying them and they still treat you like sh!!t and come round for an inspection.

Renting in this country is a joke.

ruggedtoast

ukcarper wrote: »

I agree with most of what you posted but who is going to provide these properties. There is nothing stopping companies buying or building properties and letting them out on the terms you want but nobody seems to want to do it.

Plenty of people would be happy to do it, but its very difficult to get planning permission to build in places where people want to live. They've even done away with garden developments now.

If you want to build a block of dismal new build flats with cardboard walls on a triangle of wasteland inbetween the the gas works and the railway tracks all is golden. Anywhere else forget it.

I live in the privileged home counties and the vitriolic rage and military like precision with which nimbys shut down any planned new development anywhere is something to behold. If that kind of energy was put into something worthwhile we'd probably have a cure for cancer by now.

But no, let slip that a developer has proposed a new site of affordable housing on the unused land behind the farmland that can't even be seen from the vicarage 6 miles away and its like the Home Guard turning out.

Unless its for retirement flats, or assisted living or whatever they call them now. For some reason those are fine.

Loughton_Monkey

FATBALLZ wrote: »

That's a bit simplistic, you've missed off costs like maintenance and costs of moving, which probably aren't huge but do even things up a little bit. I think your rental figures are way off, unless you are just talking about London only. The last place I rented was bought for £155k but I paid £500 a month for it.

It's pretty obvious that after a certain period, ownership becomes cheaper, so it probably makes more sense to say, 'after X years ownership makes more financial sense', rather than 'ownership is a better deal'.

I know it's simplistic, because factors like interest rate and rents change like the wind. But I did include £1,750 maintenance/cost of ownership. I don't think I've spent any more than this, except on major improvements (that add value to the house).

I bow to better knowledge on rents, but if you paid £500 last time you rented, could you be talking about 1980? Most coucils shell out up to £800 for any homeless family these days, and the average national rent (all houses) is £1,240-ish.

On moving costs, I assumed my 'mythical' 28 year old was living at home, just getting married and moving anyway - to either a rented or bought house.

And on your last sentence, I would never say "after X years ownership makes more financial sense" because that's meaningless. We are basically talking about a concept of a 28 year old (well it could be anyone, at any time really), but the point is you only have one decision at the time. Rent or buy. Black or white. One makes more financial sense than the other. Full stop. Wait another X years and the same applies. I think what you mean is that in terms of outlay the buying route can be more expensive on day 1, and only after X years, it becomes cheaper. Well of course it does.

If you accept (very broadly) the thrust of the calculations, then I would strongly advocate the following:

1. For anyone in the 20's/30's age bracket, buying a house is by far a cheaper option overall than renting.

2. But even having saved a deposit, it has to be understood that in the first few years, renting requires a lower £ outlay per month than buying [but not by much at today's interest rates]. But at a certain point, buying requires less outlay per month than renting [and especially so after the mortgage term]

These (to me anyway) are the simple facts. I can fully understand someone on a tight budget saying that they can only just afford the outlay to rent, and not buy. I can also fully understand someone saying that they cannot (yet) save up the money for a deposit.

But what staggers me - and the reason for me to double check my maths - is the number of people who seem to advocate that renting is cheaper overall.

heathcote123

Jimmy_31 wrote: »

I also think people who are desperate to buy a house know that once retirement arrives they will have a secure roof over their head whilst those who are still renting wont.

I''d go with that, and I'd imagine its the same for most.


Renting a house on a pension isn't gonna be much fun.