My obsession with not buying in UK - Prove me wrong

TheJP

RobHT said:

Schwarzwald said:

RobHT said:

[...]

With the rent I'm free, out of troubles, not in debt with the bank, free to take work opportunities where I feel more comfortable, ready to downsize if needed.

[...]

Nice part of renting long term
1. Possibility to retire in a more appropriate place for pensioners, maybe seaside locations and not UK, but UK will reduce my pension (why not )
2. Moving due to the job demand, that's the most important things. As a renter and no cover from parents, I depend from the job, full stop.

[...]

I would argue a prime source of freedom and flexibility in life comes through financial independence. Financial independence is also a source of life quality for many.
Financial independence comes through wealth.
Renting long-term remains an expense, it does not inherently create wealth. Wealth beyond purely selling your time away for a monthly salary comes from appreciative asset ownership.
Real estate is one of the most common and most widely understood forms of asset ownership as everybody needs to sleep somewhere.
Unless you very smartly invest your equity deposit, that you keep by not buying real estate, constantly into other assets, e.g. stock market, commodity trading, etc., how do you build any wealth that creates the financial freedom that you seem to seek to be able to "retire in other places", "move around as you wish", etc.
For sure not by holding cash in either a low interest environment of the last 10 years and not in a high inflation environment as we are likely to see in the next 2-5 years. Asset ownership often benefits from both and is often a good hedge.

With all due respect but your entire OP reads like non-sense to me and you dont seem to understand very basic fundamentals of building wealth long-term. Wealth comes through asset ownership, which is appreciating, you dont necessarily need real estate for it, but for many it is a/the starting point.

Hi, I liked your answer.
I explain better, I invest 3k almost each month.
Technically speaking, what I did in the last few years only will pay off my retirement, even if I exclude the pension pot...
Obviously, I would love to have my own house, customize it etc, and even see it as a great asset, but to me, an house in UK looks only a liability.

There is a chance though, I take the mortgage and I rely entirely on my mortgage insurance, which btw it doesn't cover my entire paranoia about asset security .
Then, the day I'll lose my job and don't get another one that pays well too, I'd like to understand how do I pay my mortgage...
I think that I'll be always above 60k, which is enough for a mortgage, but not enough to stay quite and to offset any house issue later on... Plus it won't give me anymore the chance to invest properly and consistently.

I get it, I make this reasoning because now I'm full of cash every month (even though it's about coins in reality, I'd need much more), but it won't be always like that...
Normally, the people with low income tend to buy an house because they believe they have secured the asset from the day one, then explain me why many people declare bankrupcy and lose the house... All the people that declare bankrupcy own something in real estate, coincidence? I don't think so. It's simple, they own the debt not the house, when they declare bankrupcy, they lose all.

What do I lose instead? Just the rent, my credit history doesn't get destroyed and I can always stand up, my insurances are gonna cover up as well.
Surely it can go bad also for me in some weird situation, but again, I don't own any debt, this is the greatest safety of all time.
Imagine a person like a company, that owns such level of debt in %, would it be even allowed to get a talk with a fund manager or a venture capitalist to get funds?
Not at all , I've seen rare cases as such, and most of them were funded by the governments or affiliated.

What does your crystal ball say?

Do you honestly think it this circumstance you'd be better off in a rental?

If you lose your job, you have the equity to either pay for a long term rental or buy a smaller house and afford the monthly payments. What will the eviction from a rental give you? A S21 and a good reference isn't going to pay the bills.

Clearly you are anti-house buying, so go rent and see what that life brings you.

RobHT

Schwarzwald said:

RobHT said:

[...]

If my rent remains the same (1k), I'll pay 360k in 30y...

Obviously, I need to make other assumptions:
1. I didn't consider inflation, but that will impact the mortgage most probably, not the rent prices, it's not that easy to increase. For example, in the last 2y of pandemy it didn't increase
2. Interest rates can vary a lot, but I considered the lowest in my comparison
[...]

[...]

Do you have any basic understand of the relationship between inflation and interest rates?
What kind of an assumption is it that your rent remains the same over 30 (!) years?

This is a bullsh*t-in, bullsh*t-out kinda calculation truly not worth looking at the result.

I considered 1M for the rent in 50y, 66% more than if I pay the same exact amout I'm paying now (1k --> 600k rent in 50y).

Schwarzwald

RobHT said:

Schwarzwald said:

RobHT said:

[...]
In Germany, more than 50% rent and only for career purposes and the high cost in big cities (look at the rent limit in Berlin, against the international free market rules).

[...]

I don't see more rights in other countries for renters, it just depends from the common or custom contract the you make, that's it.

you also dont seem to actually have much knowledge about the things you write.

Tenants' rights are fundamentally different in, for example, Germany compared to the UK and one reasons, besides others, including historical reasons, that home ownership is so low in Germany and renting so prevalent.

In Germany you have such strong tenant protection that you can safely rent for decades and stay in the same property with very limited rights for the landlord to get you out, which takes away a key incentive to actually buy real estate.

[...]
Then, in Germany the house prices is much lower, I'd be tempted to buy there no matter what, and they are properly built.

Btw, the quality of life is immensively higher in Germany .

sorry dude, but that is all not true. there are economic reasons WHY house prices are lower in Germany on an absolute level. But the picture is very different when you look at % rental yields. And different when you compare cities, Berlin, Munich, Dusseldorf, Frankfurt, Dresden, Dortmund - real estate prices across these cities are wildly different.

But sure if you simply compare Berlin and London real estate prices yes you can draw simple conclusions. For simple minds. That's a simple thing to do. Just incorrect. But sure do it.

RobHT

theoretica said:

I think you are wrong - to make it into an obsession.  That implies a fixed mindset which is unwilling to consider changing circumstances and assess whether the decision you made is still the right one. 

LOL

TheJP said:

RobHT said:

TheJP said:

You spend x renting

You spend y buying

At some point y will no longer be an element of expenditure apart from minimal costs.

x will pay out 0 equity

y will pay out equity 

y will pay out equity only if all goes well , plus it needs reconstruction before to be sold or you need to sell at a low price in the future...
I'm pretty sure you won't have the cash to do so, maybe if you take the 25% lump sump from your pension, which is a bad idea...
Then what? You sell and where you go?
So we come back to the point that you need to reconstruct your house, mainly inside but also something outside, definitely the roof.
At the same time, be ready to rent elsewhere for 6 months minimum, if the company doesn't delay the project btw.
Tons of money man, tons of money...

A - find a house that doesn't need reconstruction, if it does you are still likely to benefit from the added value.

B - Move in, build equity, re-mortgage then reconstruct. Then added value perks up equity.

C - See A, but again I'm sure the added costs will be consumed by the equity/house rise over the years.

Tons of money on rent man, tons of money paid to someone else...

l can change my mind man, but I changed from ownership to rent.
Don't get me wrong though, if I could get a 2-3 beds house for 200k around the London zone (like 10y ago before the Lehman Brothers case), I would go for it, but just because is a business location and the price is kind of ok, otherwise I wouldn't buy anything in UK.

RobHT

Slithery said:

RobHT said:
then explain me why many people declare bankrupcy and lose the house.

The number of people who go bankrupt in this country is miniscule.

RobHT said:
All the people that declare bankrupcy own something in real estate, coincidence?

Also false. People who don't own property also occasionally go bankrupt.

Probably I said it wrong, I wanted to say that most people that declare default/bankrupcy lose also the house, I'm talking about private owners, nothing to do with businesses.
Then, one fundamental thing, if you have kids is different, I don't have any and I won't, I'll be the favourite target of banks  

Schwarzwald

RobHT said:

[...]
Imagine a person like a company, that owns such level of debt in %, would it be even allowed to get a talk with a fund manager or a venture capitalist to get funds?

you are just talking without any knowledge about the subjects. 

Companies with 4-4.5x net debt/EBITDA - a typical income multiplier for mortgages - can be considered levered, but definitely not over-levered. Why dont you look into the bond market to learn a bit more about corporate lending.

Venture capitalist .... dont speak much with companies that have leverage .... for a simple fact .... that is .... that VC firms invest into YOUNG companies which are typically not profitable, and therefore cant get leverage as they simply cant pay interest and/or repay principal.

You are just talking without knowledge.

RobHT

TheJP said:

RobHT said:

Schwarzwald said:

RobHT said:

[...]

With the rent I'm free, out of troubles, not in debt with the bank, free to take work opportunities where I feel more comfortable, ready to downsize if needed.

[...]

Nice part of renting long term
1. Possibility to retire in a more appropriate place for pensioners, maybe seaside locations and not UK, but UK will reduce my pension (why not )
2. Moving due to the job demand, that's the most important things. As a renter and no cover from parents, I depend from the job, full stop.

[...]

I would argue a prime source of freedom and flexibility in life comes through financial independence. Financial independence is also a source of life quality for many.
Financial independence comes through wealth.
Renting long-term remains an expense, it does not inherently create wealth. Wealth beyond purely selling your time away for a monthly salary comes from appreciative asset ownership.
Real estate is one of the most common and most widely understood forms of asset ownership as everybody needs to sleep somewhere.
Unless you very smartly invest your equity deposit, that you keep by not buying real estate, constantly into other assets, e.g. stock market, commodity trading, etc., how do you build any wealth that creates the financial freedom that you seem to seek to be able to "retire in other places", "move around as you wish", etc.
For sure not by holding cash in either a low interest environment of the last 10 years and not in a high inflation environment as we are likely to see in the next 2-5 years. Asset ownership often benefits from both and is often a good hedge.

With all due respect but your entire OP reads like non-sense to me and you dont seem to understand very basic fundamentals of building wealth long-term. Wealth comes through asset ownership, which is appreciating, you dont necessarily need real estate for it, but for many it is a/the starting point.

Hi, I liked your answer.
I explain better, I invest 3k almost each month.
Technically speaking, what I did in the last few years only will pay off my retirement, even if I exclude the pension pot...
Obviously, I would love to have my own house, customize it etc, and even see it as a great asset, but to me, an house in UK looks only a liability.

There is a chance though, I take the mortgage and I rely entirely on my mortgage insurance, which btw it doesn't cover my entire paranoia about asset security .
Then, the day I'll lose my job and don't get another one that pays well too, I'd like to understand how do I pay my mortgage...
I think that I'll be always above 60k, which is enough for a mortgage, but not enough to stay quite and to offset any house issue later on... Plus it won't give me anymore the chance to invest properly and consistently.

I get it, I make this reasoning because now I'm full of cash every month (even though it's about coins in reality, I'd need much more), but it won't be always like that...
Normally, the people with low income tend to buy an house because they believe they have secured the asset from the day one, then explain me why many people declare bankrupcy and lose the house... All the people that declare bankrupcy own something in real estate, coincidence? I don't think so. It's simple, they own the debt not the house, when they declare bankrupcy, they lose all.

What do I lose instead? Just the rent, my credit history doesn't get destroyed and I can always stand up, my insurances are gonna cover up as well.
Surely it can go bad also for me in some weird situation, but again, I don't own any debt, this is the greatest safety of all time.
Imagine a person like a company, that owns such level of debt in %, would it be even allowed to get a talk with a fund manager or a venture capitalist to get funds?
Not at all , I've seen rare cases as such, and most of them were funded by the governments or affiliated.

What does your crystal ball say?

Do you honestly think it this circumstance you'd be better off in a rental?

If you lose your job, you have the equity to either pay for a long term rental or buy a smaller house and afford the monthly payments. What will the eviction from a rental give you? A S21 and a good reference isn't going to pay the bills.

Clearly you are anti-house buying, so go rent and see what that life brings you.

If I lose the job for a long time (much more than 12 months), I'm done, that's obvious in both cases, my insurances cover for 12 months, unless the critical illness which pays a ridiculous amount of 150k as a lump sum.
I think that the main point is how much money I will spend to have a roof over my head during my entire lifetime, rather than how better or possibly convenient it is to rent or buy.

I can tell you the worst scenario, I lose the job for a long time, I notice that things will go asf for real, so I rent a room, problem solved, I can't neither pay that, than I'm done.
Thing is, when I have a mortgage to pay, no excuse, you gotta pay or you lose all, plus I'll enter in the bad game of people that went default, my financial history forever destroyed.
Certainly, my mortgage insurance could pay out, but how much sure I am? What does it cover exactly? It depends...
Then what if I can't work for some reason, what do I do with 4 walls and no money to pay the bills and council tax, as well as food and the rest?
That's why I say that I depend from the job anyway, I'm not concerned about rent or buy, not even the cost of them, it's a completely different way to see the situation.
I've done a breakdown only to clear my mind and to show you guys that it doesn't look that convenient, even just looking at the money.

RobHT

Schwarzwald said:

RobHT said:

[...]
Imagine a person like a company, that owns such level of debt in %, would it be even allowed to get a talk with a fund manager or a venture capitalist to get funds?

you are just talking without any knowledge about the subjects. 

Companies with 4-4.5x net debt/EBITDA - a typical income multiplier for mortgages - can be considered levered, but definitely not over-levered. Why dont you look into the bond market to learn a bit more about corporate lending.

Venture capitalist .... dont speak much with companies that have leverage .... for a simple fact .... that is .... that VC firms invest into YOUNG companies which are typically not profitable, and therefore cant get leverage as they simply cant pay interest and/or repay principal.

You are just talking without knowledge.

VC firms invest in who can build something revolutionary, and I do it too, the problem is that I posed the message in the wrong way , basically, I'm not one of those companies that receive 200M funds , so why i should take such level of debt, for a company would be just nuts, but there are few exceptions.

I'm not sure about bonds, I'm not an expert there.

Getting_greyer

Is it fair to say that you're a high earner with a large amount of your earnings being invested? And your employment means you will be based in big cities, and potentially moving between cities overseas?  

I'm ignoring "reconstruction" and insurances here but in that scenario being a renter makes sense to me purely for the lifestyle.  I think it's different for those that rent but can't save more because they stuck in a cycle of paid,rent,paid,rent. Whereas for you it seems, paid, rent, invest, paid,rent, invest. After enough cycles you can decide to either buy own home outright or let investments pay your rent instead of your labour.

Still think you had some right dodgy numbers in first post though.

TheJP

RobHT said:

theoretica said:

I think you are wrong - to make it into an obsession.  That implies a fixed mindset which is unwilling to consider changing circumstances and assess whether the decision you made is still the right one. 

LOL

TheJP said:

RobHT said:

TheJP said:

You spend x renting

You spend y buying

At some point y will no longer be an element of expenditure apart from minimal costs.

x will pay out 0 equity

y will pay out equity 

y will pay out equity only if all goes well , plus it needs reconstruction before to be sold or you need to sell at a low price in the future...
I'm pretty sure you won't have the cash to do so, maybe if you take the 25% lump sump from your pension, which is a bad idea...
Then what? You sell and where you go?
So we come back to the point that you need to reconstruct your house, mainly inside but also something outside, definitely the roof.
At the same time, be ready to rent elsewhere for 6 months minimum, if the company doesn't delay the project btw.
Tons of money man, tons of money...

A - find a house that doesn't need reconstruction, if it does you are still likely to benefit from the added value.

B - Move in, build equity, re-mortgage then reconstruct. Then added value perks up equity.

C - See A, but again I'm sure the added costs will be consumed by the equity/house rise over the years.

Tons of money on rent man, tons of money paid to someone else...

l can change my mind man, but I changed from ownership to rent.
Don't get me wrong though, if I could get a 2-3 beds house for 200k around the London zone (like 10y ago before the Lehman Brothers case), I would go for it, but just because is a business location and the price is kind of ok, otherwise I wouldn't buy anything in UK.

Ok so for the sake of this discussion choose one route, you're trying to compare apples with pears whilst doing so 10 years ago then you need a cold cold shower my friend.

Perhaps a cup of coffee with a spoonful of realisation may help.