Renting vs Buying

Ticked

saverbuyer wrote: »

Really depends. If I stuck the difference between my mortgage and renting into a lifetime ISA (with 4% growth) I'd have 600,000 available at retirement. I haven't though, r.

Magic words, ' I haven't'. Neither would I, and neither would the vast majority! And you'd be paying rent after retirement having bought the house for the landlord!

saverbuyer

Ticked wrote: »

Magic words, ' I haven't'. Neither would I, and neither would the vast majority! And you'd be paying rent after retirement having bought the house for the landlord!

I think you're missing the point.


The landlord would be buying it himself. He'd be subsidising me. £500+ every single month. The rent wouldn't cover the interest only mortgage and rates.




I'd be paying rent from the £600,000 I'd have sitting.

Ticked

saverbuyer wrote: »

I think you're missing the point.


The landlord would be buying it himself. He'd be subsidising me. £500+ every single month. The rent wouldn't cover the interest only mortgage and rates.




I'd be paying rent from the £600,000 I'd have sitting.

So many scenarios, variations on a theme. Possibly, I concede, it makes sense to rent in your example, but is that typical of the average house buyer? Many are renting circa £500 per month when they could be buying a similar property for about the same amount. If it's a little less per month that's money towards upkeep, if a little more it's worth it to have the capital value and do whatever modifications you wish, e.g. 2nd bathroom, loft conversion, conservatory. Not many landlords would do that for you! A mortgage has an end date, renting doesn't.
However, whatever milks your cow! :beer:

marathonic

saverbuyer wrote: »

Really depends. If I stuck the difference between my mortgage and renting into a lifetime ISA (with 4% growth) I'd have 600,000 available at retirement. I haven't though, I've bought. But I'd happily pay the rent out of that pot.


Obviously I don't know what's going to happen to inflation, interest rates, average rent etc. I could even live in Italy for 6 months of the year.

The NI property price report out on 19/02/2014 was for Q4 2013 when averages prices were £101,879.

The latest report today is for Q2 2016 where average prices are quoted as £123,241.

Back then, like now, you were arguing that people were wrong to buy - yet those people have properties that rose by 21% in value.

Here is the post from a thread in 2014 where you hinted at an economy indicating an imminent crash:

http://forums.moneysavingexpert.com/showpost.php?p=64747578&postcount=106


Here is a post from the same thread where I worked out that, even back then, I was saving money by buying as opposed to renting:

http://forums.moneysavingexpert.com/showpost.php?p=63841957&postcount=94

The difference today is that my mortgage rate is 1.54% as opposed to 2.9% - representing significant savings. The other difference is that the latest house in my estate to go let-agreed was at £750 p/m as opposed to £600 p/m - representing even more savings.


OP, my advice is just do your own research. Work out the cost of buying versus the cost of renting, like I done in the past. If buying is cheaper, it's more than likely the best option. However, even if it's a bit more expensive, it may be the preferred option due to the increased flexibility.

Saverbuyer isn't the only one that argued that I made the wrong choice. Plenty of others argued that I'd be wiped out by increasing interest rates - yet interest rates have actually gone down whilst rents have increased (by a higher percentage than property prices in the case of my house).

As nobody can accurately predict what will happen with rents and interest rates, your best assessing the situation based on the facts now - not predictions. This is because rents are just as likely to increase as interest rates and property prices could go either way.

My own opinion is that if buying isn't SIGNIFICANTLY more expensive than renting, it indicates that properties are not undervalued.

qwert_yuiop

I'm sorry I mentioned this, but it can't be denied that a decent property crash blows all these theories away, leaving landlords suffering and tenants relieved.

Do you think a 20% recovery in the 2.5 years after a meltdown is a lot? Remember there has been no rise at all in ten years, and the buyers of 2007 will probably break even (sort of) when a loaf is £7 and a packet of crisps £3.50.

Yes, every business has ups and downs, mine has, but the landlords who bought post 2005 have been underwater since, and now have to look forward to a tax system that really doesn't like them very much.

Yes, I'm a property owner. I bought my farm because I wanted it. No other reason.

Lily-Rose_3

Heisenbug wrote: »

Renting isn't dead money anymore than solictors fees, stamp duty, interest, service charges and maintenance all are. You'd need to fully cost out renting versus buying over the time period you're planning on staying. If I wasn't sure about committing to a 12 month lease I definitely wouldn't want to consider a mortgage.

Agree with this ^^^

People who buy (or have bought,) sing the praises of buying, but there's a lot they don't tell you, (or choose to not admit to.) Like the cost of maintenance and repairs that runs into multiples 1000s over the years (even multiple 10s of 1000s,) the constant worry of losing their home if they lose their job, the constant worrying about their finances, worrying about not being able to sell if they need to, and the knowledge that if they need care, they will have to sell their home to fund it. The list is endless. Being a homeowner 30+ years ago was different; it's much worse and way more stressful now for a number of reasons.

I know several people who have had their home on the market for over a year and can't sell. They can't drop it too much either, as they need a certain amount to pay off the mortgage, and many people I know are in negative equity.

Renting vs buying? Renting every time IMO. Especially if you're lucky enough to land social housing. I know some places have long waiting lists, but in some places, I have known people only wait 6 months to a year to get housed. Depends how fussy you are too.

Good luck with whatever you do anyway.

saverbuyer wrote: »

It's a tough one. I wouldn't buy an apartment but I'd happily rent one. Management charges and rates mean its usually cheaper to rent on than buy.

If you don't have a car then think about subletting the parking space (if it comes with one).

Yeah, I wouldn't buy an apartment either. Not in a million years...

marathonic

qwert_yuiop wrote: »

Yes, every business has ups and downs, mine has, but the landlords who bought post 2005 have been underwater since, and now have to look forward to a tax system that really doesn't like them very much.

Unless they bought in 2007/2008 or bought in 2005/2006/2009 with an interest only mortgage, most landlords should not be underwater. Even if they meet this criteria, they're only underwater if they made no profit from renting (at progressively increasing rent through the years) and the purchase itself was their first BTL.

That's a lot of criteria to meet before actually being underwater. Being a landlord is a long term business. You can't cherry pick a few years over the past few decades where, with hindsight, it was the worst time to buy and use that as a basis for concluding that being a landlord is a mugs game.

The BTL discussion isn't really the OP's question though, it's renting versus buying. The case for buying over renting is significantly stronger than the case for buying a BTL property - no requirement for profit, cheaper mortgage interest rates, no income tax on profits and no capital gains tax.

marathonic

Lily-Rose wrote: »

Agree with this ^^^

People who buy (or have bought,) sing the praises of buying, but there's a lot they don't tell you, (or choose to not admit to.) Like the cost of maintenance and repairs that runs into multiples 1000s over the years (even multiple 10s of 1000s,) Landlords run their numbers and factor this into their calculations. Obviously, those that buy multiple properties have more experience in these calculations - and they still purchase in the understanding that a tenants rent will cover this maintenance, their profit AND their taxes the constant worry of losing their home if they lose their job Is that one of the benefits of renting - that the landlord will happily allow you to continue living where you are after you lose your job and can no longer pay rent?, the constant worrying about their finances I haven't been worrying about finances - I would be if I knew I'd to pay unpredictable rents after retirement. I'd be interested to see any statistics though regarding the reduced worrying about finances among those who rent when compared to those who have bought., worrying about not being able to sell if they need to, and the knowledge that if they need care, they will have to sell their home to fund it. A home that I wouldn't have in the first place if I rented. Having a home would give me comfort of knowing that I have a means of paying for care if needed without relying on the state - who knows what the rules will be by the time I need it The list is endless. Being a homeowner 30+ years ago was different; it's much worse and way more stressful now for a number of reasons.

I know several people who have had their home on the market for over a year and can't sell. They can't drop it too much either, as they need a certain amount to pay off the mortgage, and many people I know are in negative equity.

Renting vs buying? Renting every time IMO. Especially if you're lucky enough to land social housing. In general, someone who has to make the desicion between buying and renting isn't someone who is going to aspire to being housed in a social house I know some places have long waiting lists, but in some places, I have known people only wait 6 months to a year to get housed. Depends how fussy you are too.

Good luck with whatever you do anyway.



Yeah, I wouldn't buy an apartment either. Not in a million years...

Replies in red

waltsalt

Lily-Rose wrote: »

Especially if you're lucky enough to land social housing.

Living the dream!

ballyblack

Especially if you're lucky enough to land social housing.

I note the poster says she is from 'middle england' not NI