Why do people pay such high rent?

Smellyonion

The biggest reason is affordability - what the banks judge to be affordable.


Letting agents do not do affordability check like mortgages. 4 to 4.5x salary is the limit for most mortgages regardless of the interest rate thereby a great deal would pay less on their mortgages than rents when interest rates are low. Letting agents look at the affordability of the rent itself and not a blanket 4 to 4.5x salary.


I could afford to rent and therefore mortgage payments but would not be able to borrow the amount to achieve the mortgage.


2 people earning

Cakeguts

Some people just cannot save money. It doesn't matter how much they earn they will never have any savings.



We let property in an expensive area. If our tenants moved 2 miles away they could rent a property for around £200 per month cheaper. In the years that they have been renting in the expensive area they could have saved enough deposit to buy a house in a less expensive area. Some of this renting at high rents is down to choice of area to live in.

sal_III

I doubt that you friend on 70k can afford to buy in central London, where he currently rents. Personally I was doing the same - renting where I wanted to live, but couldn't afford to buy. Then when the eldest kid become of school age and we had to commit to an area, we took the plunge with an overpriced new build and HTB that allowed us to buy where I wanted, but couldn't without the HTB.

There are 2 main branches of renters - one rents by choice, the other for lack of choice.

People that chose to rent do it for various reasons including, but not limited to:
- No secure employment or temporary job relocation
- Don't want to commit to an area (or indeed the UK as a whole)
- Not being in a right phase of their relationship with their partner
- Renting in an area as "Try before you buy"
- Renting in an area they want to live, but can't afford to buy

People that rent, because they can't buy for various reasons including, but not limited to:
- No saved deposit
- Not enough income to pass Lender affordability, but enough to pass LA affordability
- Poor credit file/history
- They are immigrants not eligible for mortgage

theartfullodger

Capitalism.

benbay001

I think its also massively down to wanting too much.


A lot of people my age (mid 20s) don't want to live in a small flat in a !!!! block.
They all want a 3 bed semi in a nice area.


That's not possible as a first house on an average salary.

Loanranger

Not being able to save for a deposit is the often given reason but why don't people choose to make sacrifices to save?



They choose to prioritise their spending on other things and saving for a deposit doesn't allow for the instant gratification that comes with spending (frittering) on other stuff.


I suspect that if they scrupulously noted every item of expenditure in detail then they would be shocked at how much could be put away in a savings account. It is as Dave Brailsford's oft quoted modus operandi, the little tiny changes add up to massive increases.


For non cyclists, Sir Dave Brailsford manages the uniquely successful team that was Team Sky and is now Team Ineos.


It is a mindset. Similar to eating less when trying to lose weight. You can easily sabotage your weight loss and your money saving by your negative thinking that 'You Deserve It or You're Worth It' mentality that leads to eating that chocolate (instant gratification) or buying that fancy whatever (more instant gratification).

rosieflowers

Great summary sal_III

caprikid1

benbay001 wrote: »

I think its also massively down to wanting too much.


A lot of people my age (mid 20s) don't want to live in a small flat in a !!!! block.
They all want a 3 bed semi in a nice area.


That's not possible as a first house on an average salary.

Your forgot to add, 2 decent holidays a year, 2 city breaks, 2 nice cars on lease and a meal out once a week.


"We just aren't able to save a deposit due to our rent being so much !"

lookstraightahead

Can I twist the question? What if you asked "why do people tie themselves into 25 years of buying earth instead of giving them flexibility to see the world" (no one needs to justify their reasons it's just a choice). Renting isn't a lesser choice it's equally as valid.

caprikid1

lookstraightahead wrote: »

Can I twist the question? What if you asked "why do people tie themselves into 25 years of buying earth instead of giving them flexibility to see the world" (no one needs to justify their reasons it's just a choice). Renting isn't a lesser choice it's equally as valid.

I paid off my first house of 5 years ago, the Mortgage was never higher than the rent.


At no point did having a house reduce my flexibility, I went to Hampshire, London and could have gone to other parts of the world to live, I just had lodgers or rented it out.


I can now live rent free if I wish in that location.