Is renting really dead money compared to buying?

pathtofreedom

Homersimpson wrote: »

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.

It doesn't work like that for everyone though. I bought in 2007 with a northern rock mortgage. I am lucky I could afford to over pay so did escape nram and 6.5% interest sooner than others. I can't get consent to let either due to the equity and what my mortgage costs.

I am hoping to move next year but will end up losing 20k or more on what I paid for it, plus all the interest and work I've had to put into the house in that time like new boiler etc.

I will buy again though even though this has happened as the security of hopefully having a paid off house, which I can adapt for my disabilities, is very important to me. Especially with how each government keeps stripping away the welfare state for disabled people with different cuts, and bed room tax etc. So even though I know I will no doubt lose even more money by doing this compared to renting, the hope that I might be able to pay the house off, before I have to stop working, keeps me going. That way hopefully no one will be able to force me to move later, so even if I can't maintain it and it falls down round my ears, I'll have somewhere to live and not be homeless.

dirty_magic

It depends on your circumstances. If you're planning on staying a while and you can comfortably afford it I think it's definitely worth buying, especially in London.

If you move around a lot and would be pushing your budget then there's nothing wrong with renting.

worried_jim

Dird wrote: »

The people moving out of their parents at 17 to be "independent" are fools

I agree, my office is full of people, many now pushing 40, who moved out at the earliest opertunity to move into the centre of Brighton as it was cool and trendy. They now have zero chance of getting on the property ladder, many now have kids and no money to save for a deposit as they are paying £1250 Pcm for a trendy flat in town. Never bothered to learn to drive as why should I? I live in town so they can't even move and rent to a cheaper area.

I also work with some early 20's staff who have not bothered with a toss pot media degree (hello? Brighton) and stayed with their parents and saved are able to buy.

You move out and rent + have kids = never buying a house now. Teach this to kids in schools and half the housing crisis solved in one go.

I know many young people don't have a choice and have to move out, just don't go to London or the south east you muppets.

marksoton

I don't think renting is dead money per se.

It's more about circumstance. I rented plenty of places in my 20's and early 30's. Would i want to now in my late 30's ? Not really.

I think i'd find the whole process a bit tiresome. Finding a decent place at a reasonable price,agents,checks,periodically probably having to move etc.. the list goes on.

Property ownership is no picnic but at least you have a bit more control.

joeblags

not every body is money obsessed or house obsessed, so long as they have an ok pension they are happy to live in social housing and have the , mobiles , holidays , nights out... why put everything into a house that you give away when you die inaway?, do you really ever own a house? some people are aware they have one life and want to live it.

System

Joeblags - owning a house could let you retire early if work is stressful or you want to make the most use of your healthiest years to travel or relax
And if you can then pass that money into children/grandchildren, they can have a life with less work

Mickygg

Yep I'd say 100% dead money but only if you can afford to buy.

I have friends who have a good deposit for a house but want the flexibility of renting and don't want to do diy or the risk of fixing stuff when they go wrong. That's their choice but it's dead money. They pay £1k a month on rent!!!!

Paying rent all your life until your 90 or older, or after 25 or 30 years own your own house and no longer pay rent. That says it all.

If you can't afford to buy then it's not dead money as renting is one of the only other options to have a roof over your head.

blues

Owning our own house is our route to early retirement. We will have paid our mortgage off by 50, so we'll have no more monthly mortgage/rent payments. If we were renting we'd be working til 68! I know which one I prefer.

pathtofreedom

joeblags wrote: »

not every body is money obsessed or house obsessed, so long as they have an ok pension they are happy to live in social housing and have the , mobiles , holidays , nights out... why put everything into a house that you give away when you die inaway?, do you really ever own a house? some people are aware they have one life and want to live it.

Social housing is either really hard to get, even if you're disabled, or they are changing the rules so much the past few years there is no guarantee any more you'd keep it. So I don't think you can count that as a long term option.

bigfreddiel

Renting IS dead money

Paying mortgage is not.

Both give you a roof over your head, but only one leaves you with a property after 25 years.

That's basically all there is to it.

fj