Nationwide Oct: +0.6%

Graham_Devon

HAMISH_MCTAVISH wrote: »

And in the meantime, they pay you a whopping great yield for owning them. (Either realised or imputed)

:beer:

Please explain.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Please explain.

Sure.

A house generates a rental yield, whether realised (cash paid to you) or imputed (cash you don't have to pay to rent instead of own).

Example:

HAMISH owns and lives in a house worth 220k. Rental yields in Aberdeen are typically 7%. HAMISH gets the benefit of an imputed rent of £15,400 a year.

Against that, HAMISH has to pay either interest on a mortgage of 2.5%, and/or take into account opportunity cost on cash holdings.

So I get paid around £10,000 a year to own instead of rent, based on the above.

Of course, in Aberdeen house prices also rose by 4% in the last year (Halifax). So that's another £8800, for a total gain of £18,800 from owning instead of renting in the last year alone.

Hope that clears it up.

moneyinmypocket

Well said. The HPC chain gang won't like reading that

Graham_Devon

HAMISH_MCTAVISH wrote: »

Hope that clears it up.

Not really, though does clear up how warped your mind is!

Can you buy a sandwich with these riches? Does the income get paid into your current account?

I decided to buy a car, instead of renting one all year round....I wonder how much I'm getting paid for that as I don't appear to have received any of the monies yet. Presumably I'm storing up a windfall here.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Not really, though does clear up how warped your mind is!

Do I need to use smaller words?

It's really not that difficult to understand......:(

Can you buy a sandwich with these riches? Does the income get paid into your current account?

Yes. And yes.

There is an extra £10,000 a year in my current account from owning versus renting.

If I rented instead of owned, then my outgoings would be £10,000 a year higher. And a penny saved is a penny earned..... Or in this case, a million pennies....

That's a lot of sandwiches.:D

Graham_Devon

Why not just say you have saved....rather than trying to imply you are making money via rent from your house? Y'knpw...like normal people?

It would be a lot easier, and you wouldn't look quite so silly.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Why not just say you have saved....rather than trying to imply you are making money via rent from your house? Y'knpw...like normal people?

It would be a lot easier, and you wouldn't look quite so silly.

And on a board set up for discussion of economic topics, you'd look a lot less silly if you understood basic economic terms.

Imputed rent is so broadly accepted it's even a component of GDP.

http://en.wikipedia.org/wiki/Imputed_rent

Graham_Devon

HAMISH_MCTAVISH wrote: »

And on a board set up for discussion of economic topics, you'd look a lot less silly if you understood basic economic terms.

Imputed rent is so broadly accepted it's even a component of GDP.

http://en.wikipedia.org/wiki/Imputed_rent

Yer, but I did understand it, didn't I.

All I asked is if you could spend this money on a sandwich, and it's had you suggest you can buy loads of sandwiches with your inputed rent, which is nonsense anyway, as for anyone who has an inputted rent of £1000 a month, but no money left over after bills, they can't buy a sandwich. It may have passed you buy, but it's the money in your pocket that buys you things in shops....

So to combat the tricky question surrounding the sandwich, you've pretended I don't understand what you were talking about,l when quite clearly I do.

You've saved 10k a year vs renting Hamish. That is all. It's not an income. It's not a yield. It's just a saving vs renting the equivalent building.

By what your saying I could afford to go and buy a sandwich in the below scenario....

I want a TV, I have £200 to my name in my back pocket. I go into currys, see the TV I want, but its priced at £230. So I go nextdoor to Sainsburys. I see exactly the same model for £200. I buy the TV for £200.

I've saved £30. My stomach is whinging at me, so I decide to buy a sandwich. I reach into my back pocket to find, to my absolute astonishment, £30 hasn't arrived in my back pocket and I've spent every penny I have on a TV. I can't buy a sandwich.

But in Hamish land....oh I can!!. I can use that £30 saving to buy a sandwich. I just can't actually have a sandwich and obvious I just don't understand. :doh:

I guess you'd better either run away or come up with a suitable insult!

HAMISH_MCTAVISH

Excellent work there graham, really top notch back back peddling.

It is absolutely clear to everyone else on the planet that someone paying ten grand a year less to own than to rent is in fact, ten grand a year better off than they would be if they were renting.

It's really that simple.

Do try to keep up.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Excellent work there graham, really top notch back back peddling.

It is absolutely clear to everyone else on the planet that someone paying ten grand a year less to own than to rent is in fact, ten grand a year better off than they would be if they were renting.

It's really that simple.

Do try to keep up.

Yer, which is why I said, they are saving 10k.

It was YOU who suggested you could buy stuff with your inputed rent you made on your yield in your own home. No one else. You.

Point proven.