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Debate House Prices
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Buying a house vs renting
IronWolf
Posts: 6,445 Forumite
There seems a consensus opinion in this country that buying a house is always better than renting in the long term. I'll admit that I too am guilty of taking it as a given.
But actually it isn't always true once you account for all the nuances, like you'd be surprised how fast a deposit invested in the stock market can grow when your horizon is 25 years.
Here's a model to play about with which estimates the total costs over the life of a mortgage and renting.
http://investingsidekick.com/house-buying-vs-renting/
But actually it isn't always true once you account for all the nuances, like you'd be surprised how fast a deposit invested in the stock market can grow when your horizon is 25 years.
Here's a model to play about with which estimates the total costs over the life of a mortgage and renting.
http://investingsidekick.com/house-buying-vs-renting/
Faith, hope, charity, these three; but the greatest of these is charity.
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Comments
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Only if you see home ownership in purely financial terms - surely the fact that you're buying a house to live in is more important?0
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When you buy a house, it's possible to live there for life, or as long as you wish. If your life turns out to be of this type then you've security of tenure, which you can't get with renting.
That's what makes it worthwhile.
The annual owner costs of a house look high too. 2% he's got. On a £200k house that's £4,000. Way too much, unless you have champagne tastes and want expensive repairs, expensive maintenance, top of the range everything with no expense spared.0 -
PasturesNew wrote: »When you buy a house, it's possible to live there for life, or as long as you wish. If your life turns out to be of this type then you've security of tenure, which you can't get with renting.
That's what makes it worthwhile.
The annual owner costs of a house look high too. 2% he's got. On a £200k house that's £4,000. Way too much, unless you have champagne tastes and want expensive repairs, expensive maintenance, top of the range everything with no expense spared.
Well in the US they have property taxes too which is included in that. The model is editable, you can put 1 or even 0 if you think that's more appropriate.
Also it is possible to have security of tenure in rented accommodation, I have that as I rent through a Housing Association.Faith, hope, charity, these three; but the greatest of these is charity.0 -
That model doesn't work well for the UK.
It assumes American style property taxes and mortgage interest relief, and when you cancel those out it doesn't seem to work.
A British version is here.....
http://www.greengem.co.uk/Rent_V_Buy/rent_v_buy.php
When I input my market data and assume identical HPI and Rent Inflation, it seems that Buying a home would save you about £890,084.37 over renting in the course of 25 years.
How you choose to reinvest that money is up to you, so no need to input all sorts of speculation about other investment returns.
In order to invest it, first you need to have it.....“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
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HAMISH_MCTAVISH wrote:
I just ran my figures through it - based on owning it for 10 years.....
Win!It seems that Buying a home would save you about £171,380.87 over renting in the course of 10 years.0 -
Also it is possible to have security of tenure in rented accommodation, I have that as I rent through a Housing Association.
Any British version of the comparison would need to compare not 2 but 3 options - owning, private renting and social renting. I think we all know which one would come out worst.Do you know anyone who's bereaved? Point them to https://www.AtaLoss.org which does for bereavement support what MSE does for financial services, providing links to support organisations relevant to the circumstances of the loss & the local area. (Link permitted by forum team)
Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
Oh, and wear your seatbelt. My kids are only alive because they were wearing theirs when somebody else was driving in wet weather with worn tyres.
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PasturesNew wrote: »When you buy a house, it's possible to live there for life, or as long as you wish.
Yes, that's also true.
If I input 50 years as the term I live there, then buying saves me £3,784,594.17 versus renting.
You'd have to be clutching at straws to justify some pretty bad lifestyle decisions to claim renting could ever beat buying financially in the UK.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »That model doesn't work well for the UK.
It assumes American style property taxes and mortgage interest relief, and when you cancel those out it doesn't seem to work.
A British version is here.....
http://www.greengem.co.uk/Rent_V_Buy/rent_v_buy.php
When I input my market data and assume identical HPI and Rent Inflation, it seems that Buying a home would save you about £890,084.37 over renting in the course of 25 years.
How you choose to reinvest that money is up to you, so no need to input all sorts of speculation about other investment returns.
In order to invest it, first you need to have it.....
No it doesn't assume anything, you can reduce the ownership costs to omit the taxes and the tax modifier ignores tax relief by default, 1 means it just multiplies by 1.
That calculator you gave is pretty useless, it makes no adjustment for the opportunity cost of the house deposit or takes any account of ownership costs, stamp duty, mortgage arrangement fees or anything.Faith, hope, charity, these three; but the greatest of these is charity.0 -
Any British version of the comparison would need to compare not 2 but 3 options - owning, private renting and social renting. I think we all know which one would come out worst.
If you can rent socially then input the social rent, if you can't then input the private rent. I don't get what the problem is, you don't need three options as social rent will always be cheaper.Faith, hope, charity, these three; but the greatest of these is charity.0
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