HPC thread of the week

wotsthat

lisyloo wrote: »

Lots of people seem to think they can have their home AND the benefit of the asset and you can't have both at the same time. Stating the obvious but if you need to live in it you can't generally benefit from the equity (the exception being equity release of course - but there's still a price to pay).

The main benefit of a owning a home is being able to live in it without paying rent and, as time goes on, seeing average accommodation costs falling every year (especially after the mortgage is gone).

Crashy could've purchased 18 years ago and around about now owned outright for the same outlay. So his net cash position would be about the same and he'd have an extra £350/£400 to save every month and a rent payment of zero. That would do wonders for his preferred wealth measure (cash/ annual expenses).

Having equity in it allows a few extra options over renting but I'd see them as an icing on the cake rather than the main event - the imputed rent. Of course it depends where you live and what you want to do - Grand Designs is full of people moving from London to the countryside with bucketloads of cash. I'd have to pay a premium to move to the countryside.

If equity release doesn't suit someone maybe something else would - they don't have to take any of the options and could just enjoy the imputed rent - that's where it's at.

lisyloo

The main benefit of a owning a home is being able to live in it without paying rent

Agree 100%.
All I'm saying is that if you enjoy the imputed rent, it can't also be a pension fund at the same time.
I think some people fall into that trap and find when the time comes that they don't actually want to downsize their long term family home.
Some people do seem to consider their home a place to live AND an asset.
If you've got a mansion then clearly you can downsize, but if you have a normal family home it's much harder as bungalow and flats are generally not that much cheaper in normal areas like say Bristol.

mwpt

Conrad wrote: »

Who wants to be a renter aged 65, what an insecure bleak future!
Selling your home might enable the realisation of a dream such as buying in France and offering holiday lettings as friends of ours have.

Are you being willfully ignorant? Why is the argument to owning always based around a renter flittering away all their savings? Why can't it be a renter who doesn't see value in a property who chooses instead to invest the deposit equity in a business? They could grow their wealth through other means and buy a property outright at 65. Both previous renter and owner end up with a debt free house.

wotsthat

mwpt wrote: »

Are you being willfully ignorant? Why is the argument to owning always based around a renter flittering away all their savings? Why can't it be a renter who doesn't see value in a property who chooses instead to invest the deposit equity in a business? They could grow their wealth through other means and buy a property outright at 65. Both previous renter and owner end up with a debt free house.

It's a nice thought but have you given it the sniff test?

Are most renters you know entrepreneurs who have invested a deposit sized sum in a business or are they people who can't buy because they don't have a deposit sized sum in the first place.

Crashy_Time

ukcarper wrote: »

This is where your arguments falls down there has been a massive bank engineered housing bubble but rents haven't increased.

Which statement do you agree with?

Crashy_Time

Conrad wrote: »

Just for interest I wanted to mention LBC's James O'Brien's oft' stated view on this. His a self confessed hand wringing lefty but always bangs on about the security of home owning, as he puts it "if the wheels on my life fall off one day at least I'll have a whacking great asset I can fall back on"

What he means is he can always downsize one day and live debt and rent free.
I've seen how retired tenants can become very unhappy with their relative insecurity and lack of owning their own little bit of Earths crust.

:rotfl:
:rotfl:
Tell that to someone on I.O in London.

ukcarper

Crashy_Time wrote: »

Which statement do you agree with?

Don't agree with either of them, but my point is that a bank engineered bubble and rents not increasing and mutually exclusive.

lisyloo

Tell that to someone on I.O in London.

They will have experienced high HPI in London even if they weren't making repayments so depending on when they bought they would have equity and possibly significant.

ukcarper

Crashy_Time wrote: »

:rotfl:
:rotfl:
Tell that to someone on I.O in London.

Someone who bought interest only in London would now find they have a large amount of equity.

Crashy_Time

ukcarper wrote: »

Don't agree with either of them, but my point is that a bank engineered bubble and rents not increasing and mutually exclusive.

Only if you confuse rents with house prices.