Renting 'now cheaper than buying'

tr3mor

http://news.bbc.co.uk/1/hi/business/7029832.stm

The BBC don't half state the obvious! :rolleyes:

CB1979_2

they're not the only ones it appears

jay7_2

You can either buy this house for £272,500 and pay £1535 interest only mortgage (i.e. money down the drain)...

... OR you can rent a very similar house next door with an extra room for £1050.

Here's how they compare:
It is cheaper to RENT the property for an initial 23 years.

CB1979_2

ah all well and good saying that jay, but what if you've got £150k in equity and only need a £120k mortgage?

i know my I/O on £160k is only £630, so what we saying £400ish?

so how is that better off than paying £1k?

nollag2006

Its always been thus. I've been renting out houses since the mid-90's and very few of them get rents high enough to cover the mortgage payments for the first few years.

After a while, it comes good though, as rents start to eclipse the mortgage payments

Hardly a newsworthy story - must've been a quiet day at the Beeb

barnaby-bear

jay7 wrote: »

You can either buy this house for £272,500 and pay £1535 interest only mortgage (i.e. money down the drain)...

... OR you can rent a very similar house next door with an extra room for £1050.

Here's how they compare:
It is cheaper to RENT the property for an initial 23 years.

Problem is though I'd never get to stay for 23 years and after that I'd also need somewhere to live... The monthly rent doesn't include the agents fees, the credit checks, the wrestling the deposit back of some scum bag, the moving costs, the hassle of having someone else buy you the cheapest and cr&ppiest of everything and the hassle of getting anything fixed.... add into the random 2 months notice when they cash in the asset, the contracts that prohibit putting a shelf up, decoration chosen by someone else you can't change and even if you rarely can never know if you'll be able to stay, the contracts that forbid kids and pets.... moving your kids at 2 months notice potentially every 6 months, giving the furniture away that doesn't fit in the new unkown place.... that's why despite the financial benefits people want permanent stable tenure and unless you are one of the very few who manages to get into social renting you have no chance of without a mortgage - even IO mortgages have a place renting off the bank but at least on a non-restrictive tenancy - most people want a home not a financial vehicle so comparing rent and mortgage will never reflect the sentiment or people's weightings....

PasturesNew

CB1979 wrote: »

ah all well and good saying that jay, but what if you've got £150k in equity and only need a £120k mortgage?

i know my I/O on £160k is only £630, so what we saying £400ish?

so how is that better off than paying £1k?

Plus your lost interest on £150k at, say, 5% (after tax), which is £500/month for lower rate taxpayers and £375 for rich buggahs

barnaby-bear

PasturesNew wrote: »

Plus your lost interest on £150k at, say, 5% (after tax), which is £500/month for lower rate taxpayers and £375 for rich buggahs

People spend £2k on a family holiday, after the two weeks there's no money if they'd banked it and got their interest then after a few years they'll have tens of thousands of pounds... people pay the money for quality of life not because they can save money and have money.... lots of people will pay a premium for a permanent home that short term tenure of rental fails to offer.... different if you can't afford it of course but if money can buy you stability and less hassle and you have it lots of people happy to 'waste' it buying holidays and tenure via a mortgage...

barnaby-bear

PasturesNew wrote: »

Plus your lost interest on £150k at, say, 5% (after tax), which is £500/month for lower rate taxpayers and £375 for rich buggahs

Ahhh but I bet rich buggahs think £400 a bargain to avoid wasting their time dealing with the incompetance and failings of scummy landlords and satanic letting agents.....

Romani_Ite_Domum

CB1979 wrote: »

ah all well and good saying that jay, but what if you've got £150k in equity and only need a £120k mortgage?

i know my I/O on £160k is only £630, so what we saying £400ish?

so how is that better off than paying £1k?

To be paying £630 on a £160K mortgage you must have an interest rate of about 4.75% and like wide mouthed frogs, you don't see many of them around these days.

IO on £120Kmortgage at 6% ( If you are lucky) is £600pm
Interest that could be gained on the £150K with NS&I at 5.45% = £545 pm net

Owning is £1145 pm , renting is £1050 per month... that's how its better.

Ron2256

barnaby-bear wrote: »

if money can buy you stability and less hassle and you have it lots of people happy to 'waste' it buying holidays and tenure via a mortgage...

My colleagues keep telling me how much money they have to spend on maintaining there house and how much hassle it is to get things sorted.
The fence's blown down, the boiler's packed up, the roof is licking, the gutter needs fixing, there is mold on the ceiling...
Every weekend is about getting this and that done.

It's a lot of stress and again a lot of money. And if they want to sell, they have to rip the bathroom out, update the kitchen, redo the drive...

When I come home, i've got none of this to worry about and my rent is less than 2/3rd of an i/o mortgage.

And if i've got a problem, I give a phone call to the landlord and let him do the run around.