Telegraph: Buying is cheaper than renting in more than 90% of the UK

smamst

HAMISH_MCTAVISH wrote: »

That's more than I've spent on maintenance in the last 5 years combined.

So we have noticed Hamish.

http://farm9.staticflickr.com/8306/7867469760_c7551d42b6_b.jpg

Carl31

There is about 1100 towns In the UK

50/1100 = 4.5%

90% of 4.5% = 4%

So, buying is cheaper than renting in 4% of the UKs towns?

chewmylegoff

Thrugelmir wrote: »

Doesn't go far in terms of maintaining a property on an annual basis.

As always in these things no provision for stamp duty or the lost interest on the deposit that you have to put down to buy the place. (Although when buying a cheap place like their 2 bed flat example you can probably ignore stamp for comparison purposes as it will be about the same as tenancy fees in the long run).

Their 2 bed flat example also ignores the lost annual interest of about £700 on the 20% deposit. Leaves you with a budget for maintenance, buildings insurance and furniture of £400 a year before buying becomes "more expensive". Good luck with that.

Thrugelmir

michaels wrote: »

Only if you sell them before maturity of course....

Many investment funds are holding the bonds are valued at over pay value. So holding to maturity will result in capital loss anyway.

Current yield is very deceptive, and sucking many people in.

grizzly1911

Conrad wrote: »

Interest only residential mortgages are almost outlawed so the assumption underlying this report is a nonsense unless referring to B2L?

Hey, thats got me thinking, FSA regulation has not only disbarred millions of capable would be buyers but it now favours landlords who can obtain interest only!!

B2L who can claim tax relief on the interest too?

Conrad

chewmylegoff wrote: »

As always in these things no provision for stamp duty or the lost interest on the deposit that you have to put down to buy the place. (Although when buying a cheap place like their 2 bed flat example you can probably ignore stamp for comparison purposes as it will be about the same as tenancy fees in the long run).

Their 2 bed flat example also ignores the lost annual interest of about £700 on the 20% deposit. Leaves you with a budget for maintenance, buildings insurance and furniture of £400 a year before buying becomes "more expensive". Good luck with that.

I now have a lot of experience of long term landlords and I assure you the bulk of serious investors have extremely high performing portfolios. The older ones that have been at it 20 years are really sitting pretty.

Don't you think these wise canny folk would be doing something else if it were as bleak as you guys imagine?

With rents reinvested over 20 years you get to a point fairly quickly whereby you can be buying 2 properties per year with low long term fixed rates and a healthy profit per property. Don't forget investors also generally save earned income to add to those rents.

Typical investors I deal with that have been at it 15+ years are making £100k+ profit pa, not to mention all that equity which routinely runs into millions. I'm talking just ordinary people in the main that set about B2L methodically.

sabretoothtigger

michaels wrote: »

But shares are supposed to yield less than bonds because there is a chance for capital appreciation?

Chance for capital loss is higher with shares in theory, they rank
lower.
Intel is about to issue bonds to then buy their own shares, I guess the difference will be about 2% between the two but really it could be far more as intel sells worldwide but the bonds are dollars

Im not sure if there is a rule but to me shares always must pay more but dividends are just another way to return capital/profit.
Bonds are fixed, that fix and seniority brings a lower rate of return on average?

michaels wrote: »

Only if you sell them before maturity of course....

If these people pay over par and also the coupon is not returning inflation rates they are going to lose the premium they paid.
Right now people understand this but hope that inflation falls in future


Buying houses is cheaper is not a surprise but it is also more risky?

rents reinvested over 20 years

That is the trick, to make cashflow self serving

Conrad

sabretoothtigger wrote: »

Buying houses is cheaper is not a surprise but it is also more risky?

In my experience no. In the main a constant month in month out income, usualy minor repair costs, an asset that in general holds value (unlike a share or a company), very minimal hassle in the main.

It is not hard to get to say 15 appartments in 15 years as long as youi keep re - investing rent and contribute some savings each month yourself. The rental income over say 50 years is astronomic, and the costs absolutely petty.

chewmylegoff

Conrad wrote: »

I now have a lot of experience of long term landlords and I assure you the bulk of serious investors have extremely high performing portfolios. The older ones that have been at it 20 years are really sitting pretty.

Don't you think these wise canny folk would be doing something else if it were as bleak as you guys imagine?

With rents reinvested over 20 years you get to a point fairly quickly whereby you can be buying 2 properties per year with low long term fixed rates and a healthy profit per property. Don't forget investors also generally save earned income to add to those rents.

Typical investors I deal with that have been at it 15+ years are making £100k+ profit pa, not to mention all that equity which routinely runs into millions. I'm talking just ordinary people in the main that set about B2L methodically.

What has the economic viability of BTL got to do with zoopla's stupidly simplistic calculation about whether it is cheaper for a person to rent a 2 bedroom flat or buy it?

chewmylegoff

Thrugelmir wrote: »

Many investment funds are holding the bonds are valued at over pay value. So holding to maturity will result in capital loss anyway.

Current yield is very deceptive, and sucking many people in.

If a bond is valued in excess of its par value, it depresses the yield. Why would people be sucked in by low yields?

I thought that people are being sucked in by rubbish retail bonds which pay 4-5% but which are total junk and certainly wouldn't be trading above par.