Buying is £124 a month cheaper than renting

MrRee_2

We all know that (as a general rule) throwing money away on rent isn't a good financial move.

This report puts some actual figures on it:-

http://www.moneywise.co.uk/news/2014-03-17/buying-124-month-cheaper-renting?utm_source=Newsletter2014-03-18&utm_medium=Email&utm_campaign=ContentPromotion

"It is £124 a month cheaper on average to own a typical three-bedroom home in the UK than it is to rent, according to Halifax.

The average monthly cost of home ownership was £645 in December 2013 (based on a mortgage of 73% of the average three-bedroom property value) - 16% lower than the typical monthly rent of £769 charged for the same property type.

Halifax said the relationship between the cost of owning and renting is being driven by average monthly rents increasing by over £100 since 2009, while ownership costs have remained almost the same over the period.

The gap between the two costs in December 2013 was the biggest it had been since 2009, when there was a difference of just £6 (in 2009 it cost £646 a month on average to own, and £652 to rent).

A year earlier, things were completely different. In 2008, the monthly ownership cost was 31% higher than the cost of renting"

Pixie5740

That article appears just to be looking at the difference between mortgage repayments and rent. It hasn't taken into account the actual cost of buying and maintaining a property. Then again it hasn't taken into account the ridiculous LA fees charged in E&W either.

MrRee_2

I have been mortgage free for over 10 years now - the very thought that I would still be paying £2,000 a month to live in the house I do (if I had chosen to rent instead of buy way back in the 1970's) shudders me ........ and to think in retirement I would have to continue paying that (or move to a smaller property!).

My advise, for what it's worth, is ALWAYS to buy.

The_Negotiator

Seems quite unusual, in my area there is no way a house with a £650 mortgage could be rented out for £760. I imagine this is very area specific.

Building_Surveyor

MrRee wrote: »

I have been mortgage free for over 10 years now - the very thought that I would still be paying £2,000 a month to live in the house I do (if I had chosen to rent instead of buy way back in the 1970's) shudders me ........ and to think in retirement I would have to continue paying that (or move to a smaller property!).

My advise, for what it's worth, is ALWAYS to buy.

That's all very well and good but some people will find that they will never be in the financial position to buy. I'm sure your house was worth a lot less than what it's worth nowadays than when you bought it.

bap98189

MrRee wrote: »

The average monthly cost of home ownership was £645 in December 2013 (based on a mortgage of 73% of the average three-bedroom property value) - 16% lower than the typical monthly rent of £769 charged for the same property type.

How many people only have a mortgage for 73% of the value of their house? Not many I suspect.

ging84

bap98189 wrote: »

How many people only have a mortgage for 73% of the value of their house? Not many I suspect.

what's your point? are you suggesting they are borrowing more or less than 73%?
because if it's less, as it will be for many people, they will be paying even less making the gap even bigger

mrginge

ging84 wrote: »

what's your point? are you suggesting they are borrowing more or less than 73%?
because if it's less, as it will be for many people, they will be paying even less making the gap even bigger

Its a stupid comparison that makes the whole article meaningless.

Might as well say that home ownership is £769 pound cheaper than renting (when compared to people who are mortgage free)

Is 73% the average ltv of people who come out of renting to buy?
If it is then shouldn't the average monthly saving required to get that level of deposit be added in to the renters numbers?
Or, since you don't need a (significant) deposit to rent a house, shouldn't the mortgage cost comparison be a lot closer to 100%

You will of course also note that there is a link in the article about how its cheaper to rent than buy in London.

Lies, damned lies and statistics.....

TheMetalMan0

The_Negotiator wrote: »

Seems quite unusual, in my area there is no way a house with a £650 mortgage could be rented out for £760. I imagine this is very area specific.

Quite the opposite, it's an average so covers the whole UK :undecided

mrginge

TheMetalMan0 wrote: »

Quite the opposite, it's an average so covers the whole UK :undecided

Calling something an 'average' doesn't mean it bears any relation to reality

Actual Sold House prices:
100k
150k
137k
1100k

Average (Mean) house price: 371.75k

MrRee_2

I guess, cutting through the figures, the fact remains that buying is the better option - for those who have the choice.

Had I continued renting in the 70's (I did rent for 4 years until I could afford to buy) .... I would still be renting now - and, as I said, I would need to pay £2,000 a month to live where I do ............... yet I live here without paying anything other than the usual upkeep costs (minimal).

And, in retirement, imagine having to pay rent until the day you die? What an awful thought .......................