Is renting really dead money compared to buying?

Pixie5740

I'd rather be a "fool" and independent than be an adult child with failure to launch.

Homersimpson

As has been said above, unless you need the ability to move around every few years then renting is a bad idea if you can afford to buy.

After the term of your mortgage you own the property outright and have no more money to pay other than bills and maintenance, if you rent for 25 years you have nothing and still need to find the rent every month.

An example of this was a couple I used to know who rented a house for 8 years and over the time paid a round 50K in rent over the 8 years, one day the landlord wanted the house back for his daughter to live in and a few months later they moved somewhere else and had nothing to show for all the time they had rented, if they had bought the house it would have increase by around 50k in capital value plus whatever they had paid off the mortgage, they would have been 50-60k better off if they had sold it. Now they have nothing and a house like that would cost them 50k more.

I do feel sorry for people who genuinly can't buy, but I reguarly come across so many people who claim they can't buy a house but have expensive contract mobile phones, cars on finance, go out reguarly for expensive meals etc, have expensive holidays and have worked for years and saved nothing.

r2015

My parents rented a council house until the days they died, when my sisters and I had to club together to pay for their funerals, there was no estate to leave.


My wife's parents bought their house and after they died it was sold and divided between the 6 children who each got £20,000 after the funerals were paid.


Both sets of parents earned roughly the same throughout their lives but when the mortgage was paid, her parents had more disposable income than my parents who were still paying rent.

Dird

Pixie5740 wrote: »

adult child with failure to launch

Are we rocket ships? My sister did as I mentioned rather than just saving at home rent free. Now the only way her & her bf managed to find an affordable place to live was to churn out a kid for a council flat. Even then the rent is probably higher than my mortgage. The only good thing is that as it's not private she can essentially build up equity via a reduced sale price.

People that rent out of choice rather than necessity (especially young people) seem to always complain they're broke whereas if they lived at home rent free they could save £6k/year even on the 18-20 y/o minimum wage

lulalola

Dird wrote: »

Are we rocket ships? My sister did as I mentioned rather than just saving at home rent free. Now the only way her & her bf managed to find an affordable place to live was to churn out a kid for a council flat. Even then the rent is probably higher than my mortgage. The only good thing is that as it's not private she can essentially build up equity via a reduced sale price.

People that rent out of choice rather than necessity (especially young people) seem to always complain they're broke whereas if they lived at home rent free they could save £6k/year even on the 18-20 y/o minimum wage

And who says the parents are happy with this arrangement?! There's no way any adult offspring of mine who was working full-time would be allowed to stay in my house rent-free! Equally I moved out at 18 and have never gone back to my parents' because I would feel it was very unfair on them to have an adult taking up space in their house for selfish reasons.

Anyway, to answer the original question - I agree with those saying that renting isn't "dead money!" because it's paying for a roof over your head - surely that's what a home is all about, offering shelter?

Like many other 20-something and 30-somethings, I move around the country (and sometimes internationally) for work, so it wouldn't make sense to buy a property. I guess it depends on your lifestyle and what you want from life.

HappyMJ

MatthewAinsworth wrote: »

Buy to let mortgages often actually dictate that rent must be say 125% of the mortgage, and often that's a repayment mortgage

BTL mortgages require large deposits. Most mortgages require a minimum of 20% deposit and many require a 40% deposit. The 125% rent cover is based on the interest on that mortgage. An owner occupier can get a mortgage with a 10% deposit albeit at a higher rate of interest.

The leasehold flat I'm living in was purchased for £130,000. It's only ever been cheaper to rent from the day it was built. It's never been cheaper to buy it so I'm more than happy renting it. It's now worth a maximum of £110,000.

Some people just can't save no matter how much disposable income they have. When buying a mortgage is enforced savings. After 25/30 years the owner occupier (paying on time each month) will own the property. If the tenant hasn't been saving as well as paying rent they won't have anything but it is possible to save whilst renting it's just that many don't.

flora48

I'm thankful that my parents decided to buy. Having inherited a house I hope to double that for my children as we have also bought a house.

The upside of renting is having mobilty followed by not being responsible for house maintenance however your fate is in the hands of the landlord. everything depends on individual circumstances.

datlex

Simple answer NO. Renting and mortgage both give you a roof over your head. Depending on your personal circumstances one or the other might be better.

A lot of people who have had a mortgage for 30 plus years or who now one their properties which have a big equity have benefited from increases in home values. There is of course no guarantee these huge increases in prices will continue.

Dird

lulalola wrote: »

And who says the parents are happy with this arrangement?! There's no way any adult offspring of mine who was working full-time would be allowed to stay in my house rent-free!

In that case I hope you've instilled in all of them the importance of going to uni or will be gifting their housing deposits as some parents do else they'll most likely be dependent upon the state to cover private rentals going forward. But then I guess it depends on how much you charge. My cousin paid £30/week. Some crazy woman tried to convince my dad that he should have charged me £100/week, moved out soon after it was mentioned

gazter

theartfullodger wrote: »

If property prices drop (they have before, they will again..) renters will be in an enviable position compared to home owners..

Will this happen this year or next?? Dunno: Some time in the next 20 years?? For sure...

Not really if landlords are basing returns on capital appreciation, and accepting yields calculated on this...