Renting vs. Buying?

geeovana

Interested to hear what people in a similar situation to me would do in the current economic climate.

My and my partner currently own a home in the east of the country, whilst our family lives on the west coast. My job is on the east coast which I do not want to leave and so the plan is to move to the outskirts of Leeds. Commutable to work for me and we are much closer to home for family visits and we really like the Leeds area.

Plans were originally to keep our current house as a BTL and buy a second home (roughly 250K). We have been looking for around 6 weeks now and have not found anything we like or feel is really worth the asking prices.

I have started thinking if it would be a wise idea to rent rather than buy. I really don't like the idea of the huge debt associated with buying a house. i.e. a 250K house with 220K mortgage actually costing me 350K to purchase over the long run.

Is / has anyone else been in the same situation and got any advice?

Linton

Two thoughts....
- if you rented would you would pay a similar amount of money and own nothing?
- why not do what most people do, and sell your old house to help pay for a new one?

shinytop

Being an 'accidental' BTL landlord can be a real drain on your time and money as being just a worry. Especially if it's not near where you live. I say this from personal experience and know others who say the same. However if you really love the house then you'll want to keep it.

I'd also have a long hard think about what 'commutable' means. Leeds to the east coast sounds like a long way. I commute 60 miles each way but that wouldn't be for everyone. Also be careful you don't end up quite a a long way from everybody but close to nobody. Maybe it would be better, whatever you do with your current house, to rent for a year and see how it goes?

AnotherJoe

geeovana wrote: »

Plans were originally to keep our current house as a BTL and buy a second home (roughly 250K). We have been looking for around 6 weeks now and have not found anything we like or feel is really worth the asking prices.

Why ? I suggest you do the maths more carefully. Include the extra SDLT, the extra tax, the extra money you'll be paying on your new home mortgage due to havinga worse LTV. That's aside the risk and hassle and long term political climate making life tougher for landlord business.

geeovana wrote: »

I have started thinking if it would be a wise idea to rent rather than buy. I really don't like the idea of the huge debt associated with buying a house. i.e. a 250K house with 220K mortgage actually costing me 350K to purchase over the long run.

I can only speak for buying / renting where I live, maybe it's different in Leeds. In essence, monthly rental is similar to what monthly mortgage payment would be. So, either you pay the monthly mortgage for (say) 25 years and then own the house and have no more mortage payments ever, or you pay the rent for 25 years ...... and then continue paying it., indefinitely til they cart you away. The former sounds better than the latter to me.

geeovana wrote: »

Is / has anyone else been in the same situation and got any advice?

Plenty of people here seem to use the back of a very small envelope to work out their profit on letting out their house, with no space for all the costs they forget about, so yes you seem to be in the same situation as them.
I am genuinely puzzled why you think it makes financial sense to pay someone else's mortgage whilst someone pays yours (one cancelling out the other) , yet it doesn't make sense to simply pay your own mortgage.

kidmugsy

You have a choice; (i) rent a house, or (ii) rent the capital with which to buy a house, or (iii) raise the capital by selling your current house.

Remember that most people who advocate buying over renting virtually always assume (a) guaranteed increases in house prices, in spite of ample historical evidence to the contrary, and (b) negligible expenditure necessary on maintenance, repair, and modernisation.

Chickereeeee

shinytop wrote: »

I'd also have a long hard think about what 'commutable' means. Leeds to the east coast sounds like a long way. I commute 60 miles each way but that wouldn't be for everyone. Also be careful you don't end up quite a a long way from everybody but close to nobody. Maybe it would be better, whatever you do with your current house, to rent for a year and see how it goes?

I believe I missed out on quite a lot potential career opportunities by commuting quite a way. Particularly in a small hi-tec company, getting to know the CEO/MD etc over a beer after work (or rather them getting to know you!), and also mingling with the local work ecosystem (similar companies in the area, suppliers, customers) are invaluable aids to career development.


C

crv1963

geeovana wrote: »

Interested to hear what people in a similar situation to me would do in the current economic climate.

My and my partner currently own a home in the east of the country, whilst our family lives on the west coast. My job is on the east coast which I do not want to leave and so the plan is to move to the outskirts of Leeds. Commutable to work for me and we are much closer to home for family visits and we really like the Leeds area.

Plans were originally to keep our current house as a BTL and buy a second home (roughly 250K). We have been looking for around 6 weeks now and have not found anything we like or feel is really worth the asking prices.

I have started thinking if it would be a wise idea to rent rather than buy. I really don't like the idea of the huge debt associated with buying a house. i.e. a 250K house with 220K mortgage actually costing me 350K to purchase over the long run.

Is / has anyone else been in the same situation and got any advice?

What is wrong with the current arrangement? If the drive to visit family on the West coast is too long then how sustainable is a commute from Leeds to the East coast?

I started a new job with a 95 mile commute. I did it for a month then found lodgings so I don't have to commute daily. This despite enjoying driving.

If it is that you would like to see more of family would it not be better to move to the same area as them and then rent a room near the workplace? This may work out easier than paying for two houses?

AnotherJoe

kidmugsy wrote: »

You have a choice; (i) rent a house, or (ii) rent the capital with which to buy a house, or (iii) raise the capital by selling your current house.

Remember that most people who advocate buying over renting virtually always assume (a) guaranteed increases in house prices, in spite of ample historical evidence to the contrary, and (b) negligible expenditure necessary on maintenance, repair, and modernisation.

I believe they also assume that at some point they will own the house and stop paying a mortgage (there is ample historical evidence to back this up ) and will from that point on not need to pay rent for the rest of their lives.
Even if house prices fell, it would need to be an unprecedented decline to make up paying rent for 2-3x times as long as the same amounts on a mortgage.

shinytop

getting to know the CEO/MD etc over a beer after work (or rather them getting to know you!), and also mingling with the local work ecosystem

I view living too far away from work to do this as an absolute godsend - but then I'm past worrying about career development

kidmugsy

AnotherJoe wrote: »

I believe they also assume that at some point they will own the house and stop paying a mortgage (there is ample historical evidence to back this up )

In the case of someone in my family they did indeed stop paying the mortgage but they lost the house and a good deal of further capital.

Terron

When I moved last time I kept my old home and let it.
I had lost my job so I could not get a mortgage on the new property, but got a LTB one on the old one.
I found a good letting agent to manage the property as I was moving 200 miles away and so would not be able to do it myself.
The old property was in the south so the yield was poor but the capital growth was good, at least until the last couple of years, As I had lived there for 18 years I should not have to pay CGT when I sell next year.I moved before SDLT was reduced and thus well before the extra tax for second properties was added.


I had a specidic reason to keep the property for a few years - Crossrail being likely to increase the value.


What is your reason for keeping the old house?