£200k inheritance, property ladder or not?

ReadySteadyPop

Herzlos said:

ReadySteadyPop said:

  The OP`s rent is already cheaper than the mortgage they looked at

The rent and mortgage are for 2 different sized properties. I've never heard of any rent being cheaper than the equivalent mortgage, or even being close. Here, it costs about the same to rent a 2-bed as the mortgage on my 4-bed.

Yes, a recession is likely coming thanks to Trump, but that doesn't mean rents will go down much unless demand drops to the point rentals are sitting empty, which there aren't. According to this, there can be upwards of 50 rental applications per property: https://metro.co.uk/2024/09/26/54-applications-per-rental-home-make-stand-21679994/ which means you'd need a huge drop before it'd force rent prices down, and by the time that happened we'd have other problems.

ReadySteadyPop said:

200k in the bank earning interest and a cheap rental would be a dream to many people, especially if we get the dreaded Stagflation scenario when all hell breaks loose in the global economy and credit markets next year.

200k in the bank earning interest and a cheap rental sounds like hell, especially with kids like the OP. As already pointed out, the interest from 200k in the bank will barely get you a rental now, and is going to get you less and less every year unless you're growing the capital.

If the interest from the 200k is 750/month, but putting 200k into a mortgage saves 1000/month, which is the better option?


On the rent front, how many posts do you see on this forum mentioning rent increases that people can't pay, or landlords selling up and kicking them out, vs people who can't pay a mortgage?

Where do the 49 people who don`t get the property live? 

https://www.zoopla.co.uk/discover/property-news/rents-start-falling-in-major-cities/

ReadySteadyPop

Herzlos said:

ReadySteadyPop said:

  The OP`s rent is already cheaper than the mortgage they looked at

The rent and mortgage are for 2 different sized properties. I've never heard of any rent being cheaper than the equivalent mortgage, or even being close. Here, it costs about the same to rent a 2-bed as the mortgage on my 4-bed.

Yes, a recession is likely coming thanks to Trump, but that doesn't mean rents will go down much unless demand drops to the point rentals are sitting empty, which there aren't. According to this, there can be upwards of 50 rental applications per property: https://metro.co.uk/2024/09/26/54-applications-per-rental-home-make-stand-21679994/ which means you'd need a huge drop before it'd force rent prices down, and by the time that happened we'd have other problems.

ReadySteadyPop said:

200k in the bank earning interest and a cheap rental would be a dream to many people, especially if we get the dreaded Stagflation scenario when all hell breaks loose in the global economy and credit markets next year.

200k in the bank earning interest and a cheap rental sounds like hell, especially with kids like the OP. As already pointed out, the interest from 200k in the bank will barely get you a rental now, and is going to get you less and less every year unless you're growing the capital.

If the interest from the 200k is 750/month, but putting 200k into a mortgage saves 1000/month, which is the better option?


On the rent front, how many posts do you see on this forum mentioning rent increases that people can't pay, or landlords selling up and kicking them out, vs people who can't pay a mortgage?

https://forums.moneysavingexpert.com/discussion/6575379/offering-on-a-flat-that-has-tennants#latest

"i charge £400 a month below market rates as good tenants like yourself are worth keeping"

Herzlos

Do you think many landlords charge below market rates, and do you think that'd be less than a mortgage over a lifetime? I can't imagine many landlords who still have a mortgage would want to take a loss just for good tenants.

ReadySteadyPop said:

Where do the 49 people who don`t get the property live? 

https://www.zoopla.co.uk/discover/property-news/rents-start-falling-in-major-cities/

Probably still with parents or something. There's definitely a huge shortage of rentals.

I'm not sure that article is the checkmate you were hoping for:

"Across the UK, rents are expected to rise by just 3-4% in 2024, a big drop from the increases seen in 2022 (11%) and 2023 (8%) "

So rents are still climbing in 2024, just slower than 2022 and 2023.

newsgroupmonkey_

ReadySteadyPop said:

Herzlos said:

ReadySteadyPop said:

What happens if a global trade war/global inflation forces mortgage rates and general interest rates up and causes a recession that forces rents down?  What happens if you have a smart private landlord with no mortgage who keeps the rent stable to attract long term tenants?

Why would a recession driving interest rates up cause rents to go down? Rates going up means costs go up, and people need to rent somewhere. The bigger risk would be that the Government actually builds enough social houses and drives supply up, but that's not going to happen either.

Why would a private landlord charge much below market rates to attract good tenants? It's a captive market.

What happens if those things don't happen and your investment interest buys you less and less rent every year?

I really shouldn't be engaging with this nonsense, but it's kind of fascinating too.

 The OP`s rent is already cheaper than the mortgage they looked at, they would then be 200k richer if they put the inheritance in the bank, so they are saving on mortgage debt AND they have 200k yielding interest. You are tying yourself in knots trying to make a point, but I am not really sure you have thought through the value of having 200k in liquid assets for someone who said upthread that they "have no assets". It is a plain fact that private landlords have always kept rent below local averages for long term tenants, these boards are full of people saying that they did just that! Take time to read some threads and gain knowledge.

And you absolutely REFUSE to accept that they money is more likely to accumulate when invested in property.
Not to mention that at the end of all of this, when the OP retires, they'll have a house to live in.

You on the other hand will continue to pay rent until the day tou die.

newsgroupmonkey_

ReadySteadyPop said:

200k in the bank earning interest and a cheap rental would be a dream to many people, especially if we get the dreaded Stagflation scenario when all hell breaks loose in the global economy and credit markets next year.

Look Crashy, you've been saying this since 2003. "Next year will be the crash"

horsewithnoname

If I was buying my current home as perhaps a typical FTB with a ten percent deposit, then the mortgage payment on a 25 year mortgage would be around the same amount as the current rent would be. But in twenty five years I would own it and not have to pay mortgage or rent, and I would have a secure roof over my head, that no one could evict me from. 

If I rented it then after twenty five years I’d still be paying rent - and who knows how much it would be then - and could still be evicted at any time. 

Buy rather than rent would be my advice for 99% of people. 

ManuelG

Dustyevsky said:

newsgroupmonkey_ said:

ReadySteadyPop said:

200k in the bank earning interest and a cheap rental would be a dream to many people, especially if we get the dreaded Stagflation scenario when all hell breaks loose in the global economy and credit markets next year.

Look Crashy, you've been saying this since 2003. "Next year will be the crash"

Well, he was right, in 2008. We used the bad situation then to buy in Devon. There are always those suffering the 3Ds:divorce, debt and death. We found vendors willing to take a hit of about -15% - 20% to escape quickly from those.

Potential buyers who were greedy, waiting for reductions of more than 20% were disappointed. It was never going to happen.

If it had, or if a mega collapse occurs in the future, what you can buy a house for will be the least of your worries!

I'd take a 20% hit on my house to escape from death tbf

horsewithnoname

Dustyevsky said:

newsgroupmonkey_ said:

ReadySteadyPop said:

200k in the bank earning interest and a cheap rental would be a dream to many people, especially if we get the dreaded Stagflation scenario when all hell breaks loose in the global economy and credit markets next year.

Look Crashy, you've been saying this since 2003. "Next year will be the crash"

Well, he was right, in 2008. We used the bad situation then to buy in Devon. There are always those suffering the 3Ds:divorce, debt and death. We found vendors willing to take a hit of about -15% - 20% to escape quickly from those.

Potential buyers who were greedy, waiting for reductions of more than 20% were disappointed. It was never going to happen.

If it had, or if a mega collapse occurs in the future, what you can buy a house for will be the least of your worries!

It’s only really a “hit” if it puts you in negative equity. 

Herzlos

Dustyevsky said:

newsgroupmonkey_ said:

ReadySteadyPop said:

200k in the bank earning interest and a cheap rental would be a dream to many people, especially if we get the dreaded Stagflation scenario when all hell breaks loose in the global economy and credit markets next year.

Look Crashy, you've been saying this since 2003. "Next year will be the crash"

Well, he was right, in 2008. We used the bad situation then to buy in Devon. There are always those suffering the 3Ds:divorce, debt and death. We found vendors willing to take a hit of about -15% - 20% to escape quickly from those.

Potential buyers who were greedy, waiting for reductions of more than 20% were disappointed. It was never going to happen.

If it had, or if a mega collapse occurs in the future, what you can buy a house for will be the least of your worries!

The problem with the collapse in 2008 was that mortgage checks became much more strict, so it was perfect for cash buyers but if you couldn't afford a mortgage in 2007, you still couldn't afford a mortgage at 20% off in 2008.

With something that could be an investment property, the venture capitalists would swoop in and buy everything up long before normal people could jump in. So realistically, house prices would never drop more than maybe 30% outside of something catastrophic happening.

Herzlos

ReadySteadyPop said:

https://www.bbc.co.uk/news/articles/c78631e4gygo

Keep liquid funds available in case of job loss or other emergency would be my advice.

Why? You keep jumping on anything with a headline that looks bad for the economy as to why having cash and paying rent is better than buying, but you never actually explain anything.

I can get that you want to keep some kind of buffer to handle job loss / emergency, but £200k is excessive. Putting £150k into a house and keeping £50k for emergencies would still leave them better off than most of the country.