Cheaper to buy than to rent

HAMISH_MCTAVISH

As buying is now cheaper than renting in 90% or so of the UK, and as house prices have been stable for the last 3 years and will be rising soon enough, it's a shame more people can't get mortgages and take advantage of these low rates.

Instead FTB-s are stuck in rented and forced to enrich landlords.

Fire_Fox

Callie22 wrote: »

I'm really, really sick of this tired old argument that's trotted out every time there's a debate on house prices. How stupid of me, I never realised that the main reason my partner and I can't afford a house is because we have Sky (which we don't - we don't even have a TV), because we smoke and drink (although actually OH and I do neither) and because our house is full of new technology (nope, looking round can't see any of that either - I can see a £17.99 PAYG mobile phone and a laptop from 2004, but if someone could tell me where I've hidden my ipad, iphone etc etc then I'd be ever so grateful ...) and because we spend all of our money going out (so I'm not sure what I was doing last night cooking a meal from scratch so it fits within my food budget, and then doing the ironing ...)

However, if it makes people feel all smug and superior to spout the standard, pointless argument then they can go for it. God forbid anyone accepts that it is virtually impossible for ordinary,working people to save the huge deposits needed to buy when you're renting - rents are too high, and then any savings you do manage to achieve get swallowed up every time you end up having to move. Maybe I'll buy myself an iPhone (ooo, I'll do it on credit too!!) just to make other people feel like they're right ...

There is and always has been a percentage of people who simply don't earn enough to buy anywhere - those on benefits or a low income. For most it IS about priorities and choices however you dress it up. If you can't afford to buy in the south, move north where rents and mortgages are far cheaper. That might not happen overnight but it is possible and singletons, couples or families do it all the time. I am sure you will come up with very good reasons why that is terribly difficult or how there aren't any jobs in the recession but those are just smoke screens.

When my parents bought their first house they had to make compromises. We had a lodger and I slept downstairs, vegetables, fruit, chickens and rabbits in our back garden AND an allotment my parents tended every weekend, we only had camping holidays, kids shared a twice weekly bath, hand me down clothes and so on. Go back to my grandparents generation and there was even more scrimping and scraping: four people shared a weekly bath, never a morsel of food wasted, walked for most transport, only heating one room, worn bedsheets torn in half, swapped left for right and sewn back together edge to edge so the unworn part was in the centre. :eek: Back to the present day you read around MSE there are the craziest challenges, like feeding a family on £100 a month long term.

If you have a laptop and mobile phone (as I do) your house DOES contain modern technology, so modern they are from the 21st century. Neither of these are essential, they are convenient tools - if you needed them for work your employer would be obliged to provide them for you. Compared to only a few decades ago we don't know we are born!

demontfort

HAMISH_MCTAVISH wrote: »

as house prices have been stable for the last 3 years and will be rising soon enough, .

Hamish, Hamish, Hamish looks like you've had one too many wee drams o' Whisky and you think we're back in 2006. Time for bed old chap.

breadlinebetty

InMyDreams wrote: »

This report also assumes a 27% deposit at the start if you're buying. So to compare like-with-like, surely you have to also take into consideration the income that such a huge lump sum could generate if it wasn't put down as a deposit on a house. To put that another way, why not assume 100% deposit? Then buying a house would work out as almost free, surely, as there would be no mortgage repayments at all.

I think the only fair way to compare the *true* costs is to assume no deposit but then only count the interest paid on the mortgage. (Any capital repayment is equivalent to saving cash, which both renters and owners can do.) I would be much more interested in those figures.

Edited to add: so it should be no surprise that during a time of ridiculously low interest rates, buying seems cheap in comparison. If we could guarantee today's rates for 25 years, then of course buying is the obvious answer. But therein lies the problem...

A fixed rate mortgage guarantees today's rates!!

HAMISH_MCTAVISH

breadlinebetty wrote: »

[/B]
A fixed rate mortgage guarantees today's rates!!

Excellent point.

Especially now you can get a 25 year fix with interest lower than the average rent.

I notice the crashaholics tend to disappear when confronted with that fact though. Does demolish their whole "but but but, interest rates will go up" argument.:)

Lizling

mrginge wrote: »

I heard that some young people who wanted to get on the housing ladder were having to resort to measures such as - cancelling sky, not having an ipad, stopping smoking. Surely this is a breach of their human rights.

Don't know about the smoking because I don't know how much a typical smoker smokes, but the other 2 wouldn't even cover the solicitor's fees. Somehow I don't think that costs that size are what makes saving a deposit so incredibly hard.

Back in the real world, I saved a deposit while renting by living like a student (shared housing, lots of toast) into my 30s. I don't smoke, haven't got Sky, no ipad, my tv was free, my computer is ancient, I haven't had a holiday that wasn't staying with friends or relatives in I don't know how many years, and my phone contract would add up to a deposit if I saved the difference for roughly 150 years.

Come to think of it, the 9k of student loan I've paid off would have made a nice dent in my deposit, although not as much as all that rent I've had to pay.

InMyDreams

HAMISH_MCTAVISH wrote: »

breadlinebetty wrote: »

A fixed rate mortgage guarantees today's rates!!

Excellent point.

Especially now you can get a 25 year fix with interest lower than the average rent.

I notice the crashaholics tend to disappear when confronted with that fact though. Does demolish their whole "but but but, interest rates will go up" argument.:)

I'm not a crashaholic (I have a mortgage) but since breadlinebetty's comment was directed at me, I'll bite.

The figures in the article were not based on the premium rates of 25 year fixes. They were based on getting an interest rate of 3.82%.

While homeowners were spending £1,048 a month, tenants were paying only £724 per month.
Since then, the average interest rate on a loan for a new borrower has fallen from 5.91 per cent to 3.82 per cent.

25 year rates are much closer to the 5.91% (the one linked to in this thread had an apr of 5.6%). Can you really rent for less than that?

It's the 3.82% that you simply can't guarantee.

And that still doesn't take into account the 20% deposit you need. As a homeowner, who scrimped and saved and did without for several years in my early to mid+ twenties to save up a 20% deposit (even though I could have got away with less deposit back then), it frustrates me that at the time friends ridiculed me (saying I was only young once and should enjoy life...) and now I'm in the fortunate position I made sacrifices for, people tell me how lucky I was and how easy it must have been and how impossible it is today.

Edit: And yes, I know now people will come back and tell me how much cheaper housing was 'back then' even though I haven't stated what year I bought my first place. I'm not trying to suggest that it's by all means any easier today. It's not. At all. I'm just saying that people have a choice to make. It's amazing what you can learn to live without when you have a goal. And the beauty is, you get used to it. So things I have now (that others consider necessary expenses) make me feel flush! And other things I still don't have, but have got used to it and don't miss them.

Catherine_Johnson_2

Callie22 wrote: »

I'm really, really sick of this tired old argument that's trotted out every time there's a debate on house prices. How stupid of me, I never realised that the main reason my partner and I can't afford a house is because we have Sky (which we don't - we don't even have a TV), because we smoke and drink (although actually OH and I do neither) and because our house is full of new technology (nope, looking round can't see any of that either - I can see a £17.99 PAYG mobile phone and a laptop from 2004, but if someone could tell me where I've hidden my ipad, iphone etc etc then I'd be ever so grateful ...) and because we spend all of our money going out (so I'm not sure what I was doing last night cooking a meal from scratch so it fits within my food budget, and then doing the ironing ...)

However, if it makes people feel all smug and superior to spout the standard, pointless argument then they can go for it. God forbid anyone accepts that it is virtually impossible for ordinary,working people to save the huge deposits needed to buy when you're renting - rents are too high, and then any savings you do manage to achieve get swallowed up every time you end up having to move. Maybe I'll buy myself an iPhone (ooo, I'll do it on credit too!!) just to make other people feel like they're right ...

I took the post you were replying to as a bit of humour, with a bit of truth in there somewhere too. Perhaps you took it too seriously, I'm positive it wasn't directed at you personally.

You have to admit though, there are an awful lot of people around who just want everything now - all the latest gadgets, consoles, iPhones etc etc etc etc. I'd guess it was at these people, rather than you, that the post was directed. It will probably be these same people who complain, maybe in a few years time, that they can't afford the deposit for a house. Maybe if they didn't have to have everything right now, perhaps they'd be able to afford the deposit in a few years.

Just a thought.

mustang121

It would help if there was more social housing to provide cheap rent and reduce the waiting list.

My thoughts of Private renting is that it should only be considered for short term accommodation i.e student or moving to a new area for job prospects.

I have just moved in to my first mortgaged home, but only by living with the parents. It was the same with alot of my friends.

Unfortuately we all have different lifes, so that isn't always the case.

My older brother is still renting as opposed to living with our parents, because he got a sponsership to study for his doctorate at Cambridge univeristy and then continued to work for his sponsers as its good work with not bad pay. Sadly the house prices in Cambridge are quite high.

I have friend who is still renting at his parents house, simply because his mother and elder brother are terrible with thier finances.

My point is that people should not judge others without knowing thier life stories. Not every one is fortunate enough to have a stable parent 'family' home or even jobs near thier parents.

To those (like myself) who have mortgages. Please don't be smug of self-righteous, because you never know what life will throw at you.

olly300

Fire_Fox wrote: »

If you have a laptop and mobile phone (as I do) your house DOES contain modern technology, so modern they are from the 21st century. Neither of these are essential, they are convenient tools - if you needed them for work your employer would be obliged to provide them for you.

Unfortunately that statement isn't true.

1. My last permanent employer required us to use our own mobile phones for business and then said they would reimbursed us the cost of the calls on production of itemised bill. Due to the packages everyone was on which included free minutes on contracts and the fact that if you have a PAYG you don't get an itemised bill, no-one ended getting reimbursed. Those in middle management positions really suffered as all their free minutes ended up being used for business calls. I spoke to several friends' at the time who were working for larger companies and they had the same policies unless you were senior management.

2. If you don't have a computer at home and an internet connection it's hard now to look for a job. Even jobs in shops require you to apply online. The only way you can escape this is if you are lucky enough to be able to hand your CV to the manager of a small business but often the interview is arranged over the phone and confirmed with emails (so again you need a computer) as Royal Mail is unreliable.

3. Finally once you get the job there are employers who will require you to have or buy a computer if you need to work or do some work from home in both the public and private sector.