Just an observation - Renting VS Buying

quantic

pcgtron wrote: »

But there's all this talk about how much more expensive renting in compared to a mortgage payment, and yes, whilst I do agree with that in principle, I think that the maintenance and upkeep costs of a house are never included in peoples calculation.

I have owned the house I currently live in for just under 2 years, and it that time I have spent probably just in excess of £40,000 on it. Yes, I have done some structural work, but this is a cost of mine that a renter would never have had to pay for. The boiler breaks, Landlord pays, the cooker breaks, landlord pays, the roof needs replacing, landlord pays. All of these are home owner costs, so whilst owning may well be cheaper than renting, it's not by the amount that many people think it is

I think some of what your saying boils down to how smart you are when you choose which house to buy. If you buy a banger which is falling apart it may well cost less to lease but if you buy a reliable car it will cost a lot less.

Additionally, a lot of the "costs" associated with houses add value so its not a 100% loss.

Graham_Devon

wotsthat wrote: »

So buying in London isn't an option for lots of people. They could choose to rent or choose to buy somewhere cheaper - like Plymouth. Maybe owning isn't a high enough priority that they're willing to make the required compromises - fair enough but they're not without choice.

Yep, there's a choice to move elsewhere, for everyone.

That choice is made harder when you consider leaving your job (or 2 jobs for a couple both working), uprooting the kids from school, moving away from family and social circles etc.

We often see the "move elsewhere" point, and it's valid. But it's often so much harder in practice than it is to say it.

Secondly, if that's the advice for those who can't afford places in London, where are London going to get the lower end workers from? Those who serve you in shops? Those who empty the bins? Those who make the beds in the hotels?

IronWolf

Well if she hadn't blown her deposit on a car and instead invested it at the stock market lows around that time, it would be a different story

Carl31

quantic wrote: »

I know there are a lot of arguments for each way, to be quite honest - in my opinion there is no right or wrong answer as each person has different needs. I personally swing towards the buying side as I feel it meets my needs better.

I recently made an interesting observation...

Two of my friends left university at the same time, both saved up for a house deposit and had both planned to buy in 2008 but one was put off with the idea of buying because of the crisis and wanted more freedom so she used the money she had saved to buy herself a car and rented instead, while the other bought as he was in it for the long run.

Fast forward 6 years, my friend who is renting is now paying £250 more than when she started, she has had no problems with her landlord really but feels she has outgrown her little flat - but can't afford the rent on a house and now spends too much per month on bills to save to buy one.

My friend who bought has just sold their house and came away with £64k "profit". I appreciate that this money is "theoretical" since he will need to buy another house with it eventually, but as of right now - the fact is, hes got a little over £64k in his account and my other friend has got 0.

I just find this pretty crazy. Especially considering the friend who rents earns considerably more than the other and shes now stuck renting somewhere she doesn't like, paying more per month and as nil chance of ever buying now - to make matters worse her rent is significantly more per month than it would cost in mortgage payments on the house she would like to buy.

I know its anecdotal and some people will probably come on this thread and say I'm advocating buying for my own self interests or something - please save yourself the effort. I am just making an observation. I'm not sure what my point actually is. I think its probably more an indication of how broken the "system" actually is, but sometimes its best to go with the flow rather than be a victim of it. Thoughts?

you dont mention how much each party was paying for their accommodation? How much was the buyer paying out each month/year? the same as the renter? or more or less?

Also, you dont mention the other incremental costs of each type of arrangement, just the basic cost of the accomodation, and the arrangement costs, like stamp duty etc..

wotsthat

Graham_Devon wrote: »

Yep, there's a choice to move elsewhere, for everyone.

That choice is made harder when you consider leaving your job (or 2 jobs for a couple both working), uprooting the kids from school, moving away from family and social circles etc.

We often see the "move elsewhere" point, and it's valid. But it's often so much harder in practice than it is to say it.

Never said it was easy but plenty of people do it.

Graham_Devon wrote: »

Secondly, if that's the advice for those who can't afford places in London, where are London going to get the lower end workers from? Those who serve you in shops? Those who empty the bins? Those who make the beds in the hotels?

As some people are currently willing to travel across Europe and the world just to work in London sandwich shops and are more than happy to rent I don't think it's something we need worry about

Gaz83

Genuine question - what do people renting do when they retire?

Idiophreak

sinizterguy wrote: »

Renting in most cases is less expensive than a repayment mortgage.

Out of interest, do you *know* that to be the case, or do you just suspect so?

Personally, everybody I know has been at least a couple of hundred each month better off through buying... Of course, there are maintenance costs etc to add on, but on balance I'd say most people I know are better off buying.

Just wondered if anyone had seen stats on it etc?

fromtheshires

sinizterguy wrote: »

Renting in most cases is less expensive than a repayment mortgage.

Not always. My repayment mortgage is £312.58 on the nose, yet my neighbour who is renting is paying £635 a month. Both houses are identical Mid terrace 3 bed, apart from theirs has a brick drive instead of a front garden.

Working on the argument about homeowner costs, my example is a difference of around £320 (too lazy to do exact maths) a month. If the cooker breaks I can get one for less than £320 until I can afford a top of the range one. Boiler goes up it, that's the equivalent of say 3 months. As long as the homeowner puts something aside each month to cover these homeowner costs then it still works out cheaper with compounded interest on the saved money over time.

[Edit] - Idiophreak beat me to it

quantic

Carl31 wrote: »

you dont mention how much each party was paying for their accommodation? How much was the buyer paying out each month/year? the same as the renter? or more or less?

Also, you dont mention the other incremental costs of each type of arrangement, just the basic cost of the accomodation, and the arrangement costs, like stamp duty etc..

Buyer pays around £800 per month for repayment mortgage on 3 bed semi, renter pays £825 for her flat. No stamp duty to consider as was exempt at the time. Not sure on arrangement fee exactly but I believe it was £599, renter paid £825 bond.

So comparable initial costs.

Niv

I know this is anecdotal but;

I bought my house ~2005 my 12year mortgage costs me £568.21pm(has been as high as £597). The next door house (which is virtually identical)rented in 2005 at £600pm – I do not know how much it would rent for now 9 yearson but can only assume it has not gone down.

Excluding London / individuals that move around the countryregularly due to work I really cannot understand how renting works out cheaperthan buying.

Regularly the argument from renting defenders is ‘if theboiler breaks it gets fixed for free’. This is ‘true’ (a LL will factor inrepair costs to the rent so not really) however I have never had a boilerbreakdown, although I do admit I changed a noisy pump once (it cost me £30). Infact the maintenance I have had to do to my house – that a LL would do asessential - (built in mid 1800’s) is very little over the ~10years I have beenthere and amounts to barely more than ~£2k (which the bulk was a new flat roofthat will last over 10years min). To me the maintenance free ‘ace card’ rentersthink they hold is simply not there and is used to justify their decision torent.

I have no problem with renting / renters, if that’s whatpeople want to do and it works for them then its fine by me, I do not thinkbuying is best for everyone – I think it is best for me in my circumstances.What I really dislike is the argument from both sides that seems to be ‘what Ido is best and anyone that does not do it my way is wrong’.