Owning a home now 17% cheaper than renting....rental sector hits crisis point

Graham_Devon

That is....if you owned your home before the credit crunch.

Just wanted to get that point in as the 17% is a crude, though somewhat useful comparison.

In terms of monthly costs, owning a home is now typically 17% cheaper than renting, claims the Halifax. This echoes research published last month by property company LSL Property Services, which owns lettings chains Your Move and Reeds Rains. It reported that average rents have hit a record high of £718 a month, and have for the first time risen in all regions of England and Wales.

And while this may be celebrated by a select few on this forum, the downsides are getting worse.

Rising costs are putting pressure on household budgets as never before, with the homeless charity Shelter recently reporting that families are being priced out of rental properties in more than half of local authorities in England.

So is it good, or is it bad?

Well Ken Livingstone <spit> has suggested it's bad for tenants, and gives rogue landlords little incentive to improve their practices. Such is the situation in London, that he has commisioned a website where you can shop a stupid, greedy landlord.

But LSL property services says (lo and behold) rising prices are actually good for renters. (Where have we heard this before!). Why good? Well, it's painful for renters now, but if prices keep increasing, more speculative BTL investors will jump in and buy up more houses, meaning more supply and stable prices...not reducing, just stable, so it's great for renters (like denial alley).

http://www.guardian.co.uk/money/2011/nov/11/rental-market-reaches-crisis-point

CLAPTON

maybe build more houses

create jobs now

helps people who want to buy

helps people who want to rent

purch

Why would you <spit> after the name Ken Livingstone ? :eek:

ruggedtoast

Renters are the meat in the squeezed sandwich now. This callous and inhumane housing regime will squeeze every last drop into the already overflowing cup of the boomer and the btl.

CLAPTON

ruggedtoast wrote: »

Renters are the meat in the squeezed sandwich now. This callous and inhumane housing regime will squeeze every last drop into the already overflowing cup of the boomer and the btl.

surely you meant to include 'toasted' before 'sandwich'

IveSeenTheLight

Graham_Devon wrote: »

Owning a home now 17% cheaper than renting....rental sector hits crisis point

It shouldn't be such a surprise that buying is cheaper than renting.
This should always be the case.

The interesting part is that this looks like that it's not just mortgage interest that's cheaper than renting, but it's mortgage repayments and insurance.

Certainly a clear indicator that it's better to be an owner than a renter.

ruggedtoast

Renting sucks but most people who rent cant do anything about it.

OptionARMAGEDDON

purch wrote: »

Why would you <spit> after the name Ken Livingstone ? :eek:

Filthy commie scumbag.

Pimperne1

IveSeenTheLight wrote: »

It shouldn't be such a surprise that buying is cheaper than renting.
This should always be the case.

The interesting part is that this looks like that it's not just mortgage interest that's cheaper than renting, but it's mortgage repayments and insurance.

Certainly a clear indicator that it's better to be an owner than a renter.

It defies logic that anyone would think that it would be better to rent than own. It would certainly be closer if you bought just before one of the 17 year or so corrections but even then its got to be much better to own in the longer term.

Batchy

Shock... Horror... 17% falls... Lol

wotsthat

Graham_Devon wrote: »

That is....if you owned your home before the credit crunch.

Just wanted to get that point in as the 17% is a crude, though somewhat useful comparison.

It's cheaper to buy than to rent end of. The credit crunch didn't and hasn't changed this simple fact.

The OP talks about monthly costs. Once you start looking at lifetime costs it couldn't be more obvious.

If predictions of small increases in nominal house prices and small decreases in real house prices are correct it could be good news..

- current homeowners see house prices 'increase' and so don't feel poorer
- potential homeowners have time to save without the fear of house prices running away
- rental providers get a yield on their investments plus a nominal increase in property value
- renters might see some stabilisation in rents

The losers will be those waiting for the crash and those who won't/ can't save a deposit as the same old problem remains - there isn't enough housing being built so the longer term pressure has to be upwards.