To buy or to rent (1st timer!)

Crashtogether

Ok my circumstances...I'm beiginning a new job in Manchester city centre this coming september as a trainee solicitor. I will be there for 2 years, and hopefully get a permanent position at the end, although this is not guaranteed.

Basic pay in September will be roughly £23,000 pa. if they offer me a job in 2010, this will be roughly £40,000.

Currently i have about £50,000 of my own savings.

I live too far to commute to the office, so I will need to either rent or buy a place for myself. Rent would be roughly £550 per month, whilst to buy I would be looking at about £100,000, although i don't know over how many years.

I would just like some initial thoughts about what I should do. Mine are;

Renting
Flexible if i wanted to move / forced to move from manchester in 2010
House prices might come down further, in which case it would be better for me to hold off buying
Easy transaction compared to purchasing eg no searches, surveyes etc
I could rent a flat close to the office, rather than a house (which is what I would prefer over a small ish flat) thus saving on time and expense commuting

Buying
Capital investment rather than cash payments each month

Was also thinking as house prices might be too high for people now, the renting sector might become more expensive (not too sure about this!)

I really don't know what to do, except if I wanted to buy i guess i should be starting to look now.

Thanks in advance for any comments or advice

mr.broderick

What are you wearing at the moment?

[Deleted User]

I purchased my first house just over two years ago after spending years wondering 'should i/shouldn't i' and I have to say, though initially I felt like I'd made the worst decision of my life, it turned out to be a really good one.

Owning your own home comes with lots of costs, hassles and headaches and I think I've aged about 10 years in the past 2 but the thing I always remind myself is that I'm not paying dead rent money, it's going into a form of investment.

Naturally, the current financial situation is giving everyone the jitters so maybe it's worth asking yourself if the property lost 20% of its value, would that put you into an irrecoverable position and potentially bankruptcy? If you think it would, maybe renting's a more sound option but if not, go for purchase.

The 20% figure was given to me by someone who's into property development, so he might have just plucked it from thin air but it kind of sounds like a reasonable way to assess the situation!!

Either way, good luck with your new home!

mountainofdebt

I would say it would depend on whether you know the area or not.

If not then rent - that way you can work out which areas you want to live in without the expense of buying and then finding the location of the property is unsuitable

neverdespairgirl

Congratulations on your training contract!

In your circumstances, where you might have to move to another city 2 years after you move to Manchester, and bearing in mind the plummeting flat prices in the city, I'd rent.

beingjdc

Crashtogether wrote: »

Buying
Capital investment rather than cash payments each month

I bought a flat once. I promise you it involved cash payments every month!

Anyhow, as for useful advice, the main thing is to remember the friction costs. Buying and selling involves lots of tax, legal and estate agent costs, so even if prices don't go up (or fall) while you own, if you need to sell within a few years, those tend to wipe out any gains.