Home Ownership is £200,000 cheaper than a lifetime of renting

chucknorris

MacMickster wrote: »

Lifestyle choice should really be the only choice.

Nobody really knows how house prices, interest rates, rental legislation and a host of other variables are going to vary over a lifetime, so to try to base the decision on a financial calculation over a lifetime would be laughable.

We have enough problems finding decent holiday accommodation with our dog without adding finding a home to the list. But also savings/investments are so poor at the moment so I really wouldn't want to ivest it in anything but our home.

Our real problem is whether to buy somewhere in Spain/Portugal for the winter, but I just don't want the hassle of long distance ownership so I reckon we are going down the long holiday let (3-4 months) for this.

Andy_L

Graham_Devon wrote: »

They have allowed £2,000 a year for maintenance of the property.

The obvious flaw in the calculations, is assuming people buy one house and live in it for the rest of their lives.

They've also assumed that the renter only saves the 20% deposit in taxable cash savings rather than a tax free stocks/shares option & doesn't do the same with the money they don't spend on insurance/maintaince etc

Andy_L

wotsthat wrote: »

What would you say was a reasonable set of assumptions to calculate the relative costs of renting vs. buying?

Historical numbers over the last 50 years?

The_J

Didn't I destroy Hamish/DpchMoron and co on this point a few weeks ago? They were arguing that you would break even by 25 years and this shows only £200,000 better off over 50 years.

wotsthat

Andy_L wrote: »

Historical numbers over the last 50 years?

.....Such as?

wotsthat

MacMickster wrote: »

Lifestyle choice should really be the only choice.

Nobody really knows how house prices, interest rates, rental legislation and a host of other variables are going to vary over a lifetime, so to try to base the decision on a financial calculation over a lifetime would be laughable.

Lifestyle choice is just a single factor to consider.

No financial planning decision is made with the aid of a crystal ball. What people do is make decisons based on the information they to hand at the time and apply their own forecast.

What would be laughable would be if I bought a house because I calculated today that in 50 years I'd be better off. Of course, what would really happen is that I'd buy a house today and then review that decison at appropriate break points in the future i.e. house moves, interest rate changes, job moves etc.

Fail to plan.........

Andy_L

wotsthat wrote: »

.....Such as?

Well all the numbers they made assumptions about.

wotsthat

Andy_L wrote: »

Well all the numbers they made assumptions about.

They looked reasonably sound to me. If I'd been trying to make renting look as cheap as possible I'd have used similar numbers.

Andy_L

wotsthat wrote: »

They looked reasonably sound to me. If I'd been trying to make renting look as cheap as possible I'd have used similar numbers.

I do not understand you. My suggesting is, instead of making some assumptions about future interest rates etc over the next 50 years use what actually happened over the past 50 years.

You then can't have any real disagrement about their validility, other than saying "well it's different this time", which it may well be but the past is a useful starting point for trying to predict the future

wotsthat

Andy_L wrote: »

I do not understand you. My suggesting is, instead of making some assumptions about future interest rates etc over the next 50 years use what actually happened over the past 50 years.

You then can't have any real disagrement about their validility, other than saying "well it's different this time", which it may well be but the past is a useful starting point for trying to predict the future

You've still quite carefully not said which assumptions you have a particular issue with.