Why do people pay such high rent?

Skiddaw1

Morbier wrote: »

What a can of worms the OP has opened!

Having read through the replies, I think there's an obvious attitude problem, peculiar to the UK, which isn't seen in Europe, where renting is more the norm.

That's very true I think. Friends of ours who live in Germany really struggle to understand the British obsession with owning property. Where they live, renting is very definitely the norm rather than the exception.

MysteryMe

The norm is to buy in the UK so that is what most people do or wish to do but there will always be those who prefer to rent and there is nothing wrong with that. The availability of rented accommodation serves a useful purpose for a variety of reasons.

I don't actually see all this attitude problem or judgemental smugness being claimed. There are a couple of posts in a three page thread making reference to lifestyle choices and that's it. There are also posts from people who rent referring to their lifestyle as well.

Callie22

Skiddaw1 wrote: »

That's very true I think. Friends of ours who live in Germany really struggle to understand the British obsession with owning property. Where they live, renting is very definitely the norm rather than the exception.

The laws and regulations surrounding renting are very different there though. A good chunk of the British obsession comes from the fact that in general, renting is pretty insecure over here. Things are changing but very slowly, and we're a long, long way from having the kind of rights and security of tenure enjoyed by German tenants.

JackeeBoy

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 am mainly talking about high rents. If you're wealthy and can afford to rent, similar to how wealthy people sometimes don't buy a car because they want to trade it in every 3 years, fair enough. Your point about flexibility and being able to "see the world" and I don't really get too much. If you're travelling every second, not settled in a place then your really not the topic of this conversation.

caprikid1

I honestly think its the same with everything, Why do you rent instead of buying.


Who Rents TVs now and washing machines ? Who buys cars ?

JackeeBoy

epinjy wrote: »

Younger and smaller deposits are more risky to lend to, if higher home ownership rates are what is desirable, the riskier lending that comes with that will have to be accepted.

I have always been interested whether this is backed up by some statistics. In theory, a younger person may be less stable in their relationship or job and therefore something like divorce messing up there mortgage payments is more likely. In theory. Also having low deposits is, in theory, more risky for the lender.

But in practice, does this add up? If you were going to give a 100% mortgage for a decent interest rate, is that person more likely to miss out on their monthly payments then someone who paid a 10% deposit? Also, giving out a 100% mortgage will only spell trouble for the bank and cost them financially if the borrower somehow started missing payments from day 1.

I have personal experience with lenders logic not making sense. My wife has a twin and shares a similar first name. Their credit profiles got mixed up (sister had poor credit) and our current mortgage lender was offering us an INCREASED interest rate because of my wife's supposed poor credit. This didn't make sense to me because as if she was an increased risk, surely having higher payment means we are LESS likely to afford the mortgage and MORE likely to miss payments and therefore increasing the bank's risk....

It would just be so interesting to see all the cases of missed payment, foreclosures etc. and where the fall in certain demographics; age, relationship status, salary, LTV etc.

caprikid1

JackeeBoy wrote: »

I have always been interested whether this is backed up by some statistics. In theory, a younger person may be less stable in their relationship or job and therefore something like divorce messing up there mortgage payments is more likely. In theory. Also having low deposits is, in theory, more risky for the lender.

But in practice, does this add up? If you were going to give a 100% mortgage for a decent interest rate, is that person more likely to miss out on their monthly payments then someone who paid a 10% deposit? Also, giving out a 100% mortgage will only spell trouble for the bank and cost them financially if the borrower somehow started missing payments from day 1.

I have personal experience with lenders logic not making sense. My wife has a twin and shares a similar first name. Their credit profiles got mixed up (sister had poor credit) and our current mortgage lender was offering us an INCREASED interest rate because of my wife's supposed poor credit. This didn't make sense to me because as if she was an increased risk, surely having higher payment means we are LESS likely to afford the mortgage and MORE likely to miss payments and therefore increasing the bank's risk....

It would just be so interesting to see all the cases of missed payment, foreclosures etc. and where the fall in certain demographics; age, relationship status, salary, LTV etc.

I think mortgage lenders probably have sufficient data to assess risk. How can a big deposit be anything other than less of a risk ??? I don't get "In theory" other things all being equal.

SingleSue

shortcrust wrote: »

That’s true but renting is a choice that can cost you hundreds of thousands of pounds in the long term and requires a much bigger retirement income if you never buy. I wonder if anyone has ever thought “oh I do wish we’d rented!” as they made their final mortgage payment.

I bought in my 40s and don’t regret all the years of renting. I simply wasn’t ready to buy before. A lot of things have to come together at the right time to give you both the opportunity and inclination.

There was a time in my life where I said to myself "I do wish we had stayed in rented!". I was in the first wave of redundancies when my company was relocating because we had purchased a house six months before and they didn't think I would be in a position to move with the company.

It worked out ok in the end as I found another role at a higher salary in the last few weeks of my redundancy notice but it was a bit eeky, stressy for a while there.

Re the younger generation, eldest and his partner have been saving their deposit for a mortgage and it was all looking great for approx two years time when they would have both the savings and the work history...until he was made redundant this month!

SouthLondonUser

shortcrust wrote: »

That’s true but renting is a choice that can cost you hundreds of thousands of pounds in the long term and requires a much bigger retirement income if you never buy. I wonder if anyone has ever thought “oh I do wish we’d rented!” as they made their final mortgage payment.
.

This is precisely the kind of smug, simplistic, arrogant, one-size-fits-all type of opinion I criticised earlier.
Yes, it can cost you loads in the long term, hence my point about buying almost always being better in the long term, but, again, IN THE LONG TERM.

Over medium and short terms there are plenty of cases in which renting may easily be better.

You have read the replies of those who had sudden life events (like redundancy) right after buying a house.

I know a couple in which one was fired and the other moved abroad (because of Brexit) right after they finished a very long and expensive renovation.

I know more than family which is holding off from upsizing because they are very worried that their jobs might either be made redundant or moved abroad because of Brexit.

I know another example of a person who turned down a much better job in another part of the country because she had bought a place (in an area which wasn't where she grew up, and which hadn't seen house price rises in quite a while anyway).

Two more couples come to mind - they both bought in the same area which friends and colleagues apparently loved, and they bought moved out after about 2 years because neither couple actually liked it.

SouthLondonUser

JackeeBoy wrote: »

I have personal experience with lenders logic not making sense. My wife has a twin and shares a similar first name. Their credit profiles got mixed up (sister had poor credit) and our current mortgage lender was offering us an INCREASED interest rate because of my wife's supposed poor credit. This didn't make sense to me because as if she was an increased risk, surely having higher payment means we are LESS likely to afford the mortgage and MORE likely to miss payments and therefore increasing the bank's risk....

You clearly do not understand how lending works.
Not all risk is the same. A higher risk requires a higher reward.

Why do you think a country like the USA can borrow at much cheaper rates than a country like Argentina?

Why do you think loans secured against residential property charge a much lower interest rates than unsecured loans?