Why do people pay such high rent?

JackeeBoy

Out of curiosity, I. Checked what a house like mine in my area (East London) would get on the rental market. Rent alone, it was costing £1,250 a month. My mortgage, which is higher than usual as we cut down on the years, cost £1,400 a month. I'm just thinking, if you could afford to rent a place (two bedroom terraced house) for that money, surely you should somewhat be in a position to buy? Especially if you're around 30 or younger.

I've always been curious what is the main reason people don't buy. Deposits being an obvious factor but is there more to that? I have a friend who's on £70k a year and chooses to rent near Central London despite being in a position to move in with her mum for less that a year, have a more than decent deposit, buy a house and pay less than what she's already paying each month.

davidmcn

Many reasons - "not expecting to live there long enough to make buying worthwhile" is probably a large one, as would being on short-term employment contracts etc and therefore making it more difficult to get a mortgage (or again, wanting the flexibility to move on in the short term for work elsewhere).

Fosterdog

People pay high rent because they need somewhere to live and they want to find the most suitable place for them in the right area, if the area is in demand then rent will be higher.

As for why people rent, there are many reasons but just a few would be not having a deposit saved, poor credit rating so can't get a mortgage, not enough employment history or secure enough contract for a mortgage, moving to a new area so want to rent before committing to buy, move around a lot, not wanting the commitment that goes with owning a house, just moving out of parents place and want to rent for a while first, only in an area short term (particularly students, and military), families separating but financial matters not settled yet.

The list really does go on.

caprikid1

As has been stated
1. Don't plan on being there for long.
2. No deposit.
3. Deluded that house prices will drop significantly.
4. Enjoy the flexibility.
5. New relationship, don't wish to commit.
6. Bad Credit.
7. Uncertain Job Prospects / Contracts.
8. Just moved to a new area


9. Can't afford what they want....

verybigchris

IME, lack of deposit is the biggest issue.

We were talking in work about housing last week, and I pay less for the mortgage on my 3-bed semi than any of my colleagues pay on their rent for 2-bed terraces. The difference is I was able to save a deposit and they aren't.

For even just a £100k home you're looking at a minimum £10k deposit, plus the cash you need up front for legal fees, survey, moving, immediate repairs, etc. A huge number of people have no savings at all, let alone five figures, and that's especially true if they've been trapped paying exorbitant rents. Unless they have generous parents or a wealthy relative pops their clogs, lots of people will simply never be able to make that first step onto the property ladder.

rosieflowers

Not having the income required for a mortgage in a decent area? To buy a three-bed semi where I am required me and my partner's salaries and I earn well above average. Whereas single friends (or me with just my own income) could only afford either a flat or a terrace in a really crap part of town, and what would be the point when you know you wouldn't want to live in a flat long term or raise a family in a crap part of town?

So people my age (late twenties) seem to stop in house shares or possibly rent a flat until they meet someone.

That's just one of the multitudes of circumstances that may lead people to choose to rent rather than buy.

It's like saying you have enough money to go on holiday so why don't you? Because what I can afford would be me on my own in Skeggy, so I'll just wait thanks!

lookstraightahead

Choice - some people prefer to rent and feel it's worth it

Flexibility

Life experiences - divorce, job changes, blended families, death

Very successful business people who don't tick mundane boxes like 'monthly salary'

Area preferences

Why do you think buying is better than renting?

lookstraightahead

And maybe your friend doesn't want to put on her mum and squeeze her out of her hard earned money so she can live for free

AnotherJoe

For me, two reasons.
1. It's cheaper to buy than rent, eg my mortgage payments even when starting out were less than rent and last time I looked that still held, eg it was cheaper to pay a mortgage on the house next door to me than the rent.
2. A mortgage comes to an end. Rent doesn't. Something that many don't seem to consider when looking at what's cheaper.,

Crumble2018

For us, it was lack of deposit - the only reason we can buy now is that we were gifted some money, but even now can only put down a 5% deposit. We are currently paying £850 a month in rent, Our mortgage will be £1050, plus service charges of £100 a month - so we will be significantly worse off!

Brilley

...recently talking to a colleague at work who is young and renting. The only reason they rent is that they can't get a deposit together.

Seems very unfair to me as a real catch 22 as they pay a similar rent to what they would pay for a mortgage, but because they are both young and "low pay", they can't save while they are paying rent!