Is it really THAT important to own your own home?

epz_2

Melissa177 wrote: »

It's tought right now for FTBs, but where there is a will there is a way, and if house prices were genuinely unaffordable, people wouldn't be buying.

how many ftb'rs are buying, most cheap places get advertised as perfect btl rather than fo ftb.

personally ive stoped careing house prices will likely fall, if they dont i can easily move abroad with my company, buy a massive place and pay a fraction of the tax.

should be interesting when all the btl'rs whos mantra of "hands off my pension" when talk of taxing them realise they will need to rely on it to fund their old age. all the youth with a bit of get up and go have gone and the poles !!!!!! of as soon as poland gets back on its feet, should make the next reccession interesting.

inmypocketnottheirs

OK renters, how many of you own your own car? The fastest depreciating asset known to man. High maintenance, high running costs, servicing, repairs etc etc etc.

Do you rent your cars?

Lavendyr

I own my car, but I'm not sure how it is relevant, being that the cost of a car is far, far lower than the cost of a house. Moreover I don't view my car as an asset - as you say, the depreciation is far too high. Finally, the cost of renting a car for the amount of time I need a car (every day, 60 miles a day) would be at least as high as the cost of owning one, and probably higher. My car was cheap, unfashionable/boring, very basic and has so far (touch wood!) been reasonably reliable. I'll use it until the cost of repairs becomes financially unviable and then I'll buy another car which is exactly the same - cheap as possible to buy, run and repair, basic functionalities, gets me from A to B.

If it was cheaper to buy a house than to rent it, I'd certainly prefer to buy. Likewise, if it was genuinely cheaper to rent a car than buy one, I would. But for me, and many others, it isn't.

I wonder how many people buy their cars on finance deals rather than putting down the full amount outright (or, in other words, spend more money over a longer period of time in order to afford something that is nicer than what they could afford without borrowing), incidentally?

mlz1413

I've come into this thread quite late on and i'm putting a point across on the title of thread, my Mum moved all the time when I was little and it made me crave my own place for security I was sick of constantly packing, moving, making new friends, losing old friends etc. I bought my own place in 1991 and my mum helped me out with a large cash sum as 3.5 times my salary bought jack !!!!!!!

I worked 3 jobs, 1 full time and 2 part time and had a lodger to be able to make ends meet, I've never complained i've just been proud of what i've achieved.

So I think you have to decided what you want the most from the future.
Do you want to work a 60hr week just to buy your own place.
Maybe your landlord will sell your little flat to you, cheaper without EA fees.
Maybe you'd be better getting on the council list and then your retirement home is secure ( i know when i looked into the council list i was told it's 4 years long and i'd always be at the bottom as i worked and didn't have kids!).

Also you say your LL is good, maybe as you've proved a good tenant you could ask his long term plan, if he wants to continue renting would he cap your rent now so that you can save more money towards your future.

Fergie73

I don't understand the British obsession with property ownership at all (except for the fact that the rental market in the UK is utterly rubbish, but then that's part of the same problem - because people see renting as being something less in the UK, it's unregulated, no one gives a damn about renters and no one provides decent, affordable rentals).

Basically, whether you're better off buying or renting comes down to your own circumstances at the time, and what's happening in the wider economy. If you're young, single and ambitious, it's far, far better not to own a place as renting means you're free to move around as and when you like, to downsize, to save money. OK, you don't benefit from price rises (if they happen) but you do benefit financially from being able to move about easily for better jobs etc. And you don't run any risk of being stuck in a place you can't sell, or stuck in negative equity - which has to be an absolute nightmare for a young person, as it basically prevents you getting on with life, moving in with a partner, having kids, moving for a job etc. Plus you have less responsibility, no worries about roof repairs or drain leaks that you can't find or whatever.

If, on the other hand, you're settled with kids or you just know you're going to be staying put for the long run, it's probably better to buy for security, long term investment etc. But in the very long run, it doesn't matter at all, I don't think. Once you hit old age, if you have no income you get housing benefit, and become entitled to council places. On the other hand, if you have a £500,000 house and need to go into a care home or need any other kind of support, you have to sell the house and watch the profits disappear from it before you get any help. And at the end, you can't take any of it with you.

HugoSP

Dan,

Thanks for your reply.

The reason whay I don't think that BTL investors are solely to blame is that at current prices it simply doesn't make sense to rent out in many areas, unless you are looking to aquire the property for other purposes as well. Indeed a lot of btl investors have been offloading property for two to three years now. One of our tenants (young couple) moved out to buy their own house a few years ago. They looked at loads of ex investment properties, and indeed ended up buying such a property. Prices still continued to rise though, despite the proportion of btls falling in our local area. So there must have been something else underpinning prices.

Personally I would give a lot of creedence to your other explanation - of so called fraudulant applications, or self certificated mortgages, which I agree can effectively amount to the same thing. Making it easier for people to buy by giving them access to larger funds at decent rates will increase affordability and hence demand. As supply cannot keep up with demand, prices will rise.

10, or even 5 years ago I would have said that BTL investors were making more of an impact on price rises, simply due to the fact that btls were increasing in number. However more recently btl investors have been taking their investments out of property, hence if it was btl investors alone, or as the major influencing factor I believe we would have seen price falls then. We didn't.

As far as the current house prices as an index of income is concerned. I can offer one explanation for that. In the old days (late 80s) of much higher interest rates, my first house was budgeted on some 10% interest that wasn't fixed etc. 3 times salary was the norm. Earlier in the year one BS was doing rates of some 5% fixed for a long time. So the same mortgage is costing around half what it cost then. Hence one could now afford to service twice the debt for the same money/proportion of income. Hence when 3 x income was the norm in the old days, now 6% doesn't seem unreasonable.

Next, look at the other costs of living. Proportions of income spent on food, energy (thanks to deregulation etc), leisure, etc have all changed in the last 20 years. The cost of certain products have come down in real terms, whereas others have increased or remained stable. Hence we now spend our money differently.

Thirdly, mortgage companies have been quite clever at structuring mortgages in certain ways to ease people into home ownership. Remember the introductury 1% products? The real interest rate was more but the balance accrued onto the debt. Also, we now have roll up mortgages and other forms of equity release.

Taking into account the above I can see why 9x income has come about. When you make the stark comparison with some 20 years ago it does seem silly, but it's come about because we have enjoyed low interest rates for several years now and our spending profiles have changed. This is another reason why there are IMO other significant influences than BTLs.

How do you stop properties being bought up in droves by BTL landlords? That is another debate entirely and I know some here have indulged in that one. One way is via the tax system but I can tell you that we are taxed differently to other 'businesses' so that has been thought about recently. I don't doubt that the Tory free enterprise model has had a hand in creating this situation. Why do I invest? Because it's an area I'm confortable with. If I invested in stocks and shares the probability is that some of my investments would be in institutions that back property investment of one sort or another, for the simple reason that I would want to spread the risk, or that several PLCs etc are very diverse at what they do.

I know it's frustrating to be hampered by btls, but when each of us are faced with decisions to make for the future, we can't always afford the luxury of a social concience. I made my point in my last post about the right to buy for council tenants.

Dan. I would be grateful if you could give me an honest answer to this question. If you were a such tenant and you had the opportunity to bag a nice house at 60% of real market value - would you honestly turn it down because it would take one house out of the social housing stock?

I still maintain that there are very few (if any) people here that would turn this opportunity down if it suited them to buy. I pride myself in being honest about my motivation.

Yes, prices coming back down to normality. I tend to change my thinking here on an almost daily basis. I could be wrong but I think we may see a general countrywide stagnation as opposed to a large reduction in prices. Hence prices will fall in real terms. A representative from the NAEA was talking about price rises of some 1% per annum. With inflation running at around 2% that represents a real fall over time. To my mind this would be a good compromise between those that want prices to come down so they can buy, and those that want prices to rise to safeguard their purchases. Such price behaviour may also stave off a recession as well.

carolt

HugoSP wrote: »

Dan,

HugoSP, you argue that interest rates are half what they were in the late 80's, therefore prices can double and property still be equally affordable. But as you admit, prices haven't doubled, in salary terms they have trebled - from an average of 3 times to an average of 9 times at present. And don't forget what happened to the UK property market after prices reached their peaks in the late 80's - hardly suggests that current prices, that much higher re income, are affordable now, does it?

Also, you state that "we can't always afford the luxury of a social concience". I think there you have the crux of the matter. I, and I suspect a number if not the vast majority of those who view BTL in a negative light, feel very strongly that you can and should. For example, I have set up savings accounts for all my 3 children and save small amounts for them regularly. They all hold ethical savings accounts rather than just whatever pays the highest interest, as I felt very strongly that I did not want my children's money being used to kill or injure other people's children through investing in armaments etc etc. And that matters more to me than that they have a few quid extra. Or another example - my OH persuaded me to sell my Glaxo shares after pointing out their views on AIDS drugs (they'd been a real cash cow for me up till then; should add I got the last laugh as they promptly fell and I don't think have ever regained the price I sold them at!). And as for BTL, it's not as if it was some really secret, complicated investment scheme that only the serious professionals or an elite few knew about. It's been screaming from about a dozen prime time property !!!!!! shows for the last 7 years or so. I couldn't have afforded a BTL where I live, but it would hardly have been difficult or complicated to buy in a cheaper area so as to get my 'investment property'. BUT I chose not to.

So, contrary to your rather narrow-minded viewpoint, there are actually some people out there for whom a social conscience is a necessity NOT a luxury.

I'd rather be a bit poorer and not exploit someone else - because at the end of the day, that is how I judge myself, not the size of my bank balance or the equity in my 'property'.....

And can you not afford the 'luxury' of a social conscience? How poor are you?????

SquatNow

Melissa177 wrote: »

Housing is a commodity just like anything else. I think the fact we have such high house prices shows how desperate people are to own our own home. And Englishman's house is his castle, after all. It's part of our national psych: why do you think those house programs are so popular.

No it's not, housing(land) is a unique commodity as unlike any other, NO MORE can be created.

There is no true "supply and demand" as you cant create more.

IveSeenTheLight

Fergie73 wrote: »

no one gives a damn about renters and no one provides decent, affordable rentals).

Utter bollxxks.
There are many landlords out there who provide a good quality home for tenants and only hope that they have good tenants in return to look after the property while they are renting

anewman

inmypocketnottheirs wrote: »

OK renters, how many of you own your own car? The fastest depreciating asset known to man. High maintenance, high running costs, servicing, repairs etc etc etc.

Do you rent your cars?

That's why you should buy second hand. Depreciation is good for the second hand market. Loads and loads of good sub £1000 cars available. You should only go for a new car if you are snobbish and want to keep up with the jones's, or can actually easily afford the car without finance.

Get yourself a haynes manual and you can do basic servicing yourself if you have the time and patience.

There's certainly no point in renting a car when you can buy a good one for under £1000. Unfortunately the same cannot be said for houses due to their prices.