A perfect 'buy or rent' comparison

merlinthehappypig

There have been so many posts in recents months about the relative benefits of buying versus renting in the current market.

All of the examples I have seen, including mine, have been based on hypothetical situations.

However, the house that we were going to buy until things went horribly wrong a month or so ago has been taken off sale and is now up for rent, so I can do a direct comparison.

This is obviously based solely on our particular situation, but does give an insight into how big the gap still is, especially at a time when prices are reducing.

The house would have cost us approximately £1500 a month on a repayment mortgage over 20 years. That was with a 65% deposit and before rates increased. It's £1650 a month to rent, but there are no maintenance costs or buildings insurance to pay so it's going to work out more or less equal.

Whilst the cost is broadly the same, by renting the house I get to keep our £1750 a month net income from the capital invested so my deposit goes up and prices are coming down. Even just a 5% cut in house prices over the next year would see us better off by £46000 in 12 months time.

It's a complete no-brainer.

fc123

I was thinking about your post yesterday on 'Inflation' thread whilst skiving at work (it's bad when one skives in ones own business) and when watching the auction. Sorry to hear about all the hassle, esp on top of all the other stuff.

What about an auction property? You could get a better deal (though would have to allow for work) but you also posted once about missing doing a little bit of DIY.

There are enough people on this board who could direct you to the upcoming lists, even guide you through through the process.

Just a thought as then you could get same space but no mortgage at all as you would pay trade price (25% less?).

A nice farm somewhere...must be some coming up soon.

Anyway. just a thought....what was the original post again? renting......if you can face moving again, could try it out.

PasturesNew

My preferred plan is:
- save as much as possible as long as possible (until nerve cracks, 4-5 years)
- buy the nicest/small house in the best area without going OTT

In such a way that when I've bought the house there's enough cash left over that the interest on that then covers the household bills and basic living costs.

That is then mortgage free and living/bills free.

Then, whatever I earn would be entirely mine.

merlinthehappypig

It had crossed my mind about auction properties today, actually, when looking at the online thread.

It's not something we had considered, but it's certainly worth a look. Not only might the price be better, but presumably once the hammer falls the deal is done & the seller can't back out.

I think a farm might be out of our price range, unless it's in Zimbabwe, but something less ambitious would be great. I assumed that most auction properties would be BTL stuff, having never really looked into it.

PasturesNew

Here is an auction from today
http://www.eigroup.co.uk/onlineauctions/orderofsale.asp?AuctionID=10597&c=brn

On the intial list you can see the guide price. If you click on each number, you will see what it sold for.

About half of these were repossessions.

A phenomenal number today didn't sell at all.

If you look at this one:
http://www.eigroup.co.uk/onlineauctions/lotpub.asp?a=10597&l=494273
You can see the last bid was £102k and it is available for £105k. You can buy property after the auction if you want to try stepping back and seeing what happens.

That one is on with rightmove still, doesn't show the price it was originally though: http://www.rightmove.co.uk/viewdetails-20420051.rsp?pa_n=1&tr_t=buy

fc123

Then we can have a thread called 'Merlin and the auction'....and watch you bid...oooh and help you choose and cost up DIY work.
I need my work to get busier!

PasturesNew

fc123 wrote: »

Then we can have a thread called 'Merlin and the auction'....and watch you bid...oooh and help you choose and cost up DIY work.
I need my work to get busier!

I've been thinking about finding my local auctions and organising a get together of people to go to one.... we could all stand and shift about, giggling in one corner, watching what went on.

Then a pub lunch.



Pub lunches rock. I never get to have them usually.

Auction + Pub Lunch = ftw

(ftw is an Internet term meaning 'for the win', which means it beats anything else)

fc123

I love auctions. We used to buy our vans and cars from them (before we discovered credit) in Bermonsey. Even though we were probably shilled up, we still used to get a really good deal...use them and sell after a year or 3 at a profit.
Sorry to butt in on the thread Merlin...but I think this could be a possibility. Hammer goes down and no messing about.
A day trip to one would be good research too.

owitemisermusa

Hmm.... wasn't as bad as I thought. I was expecting a catastrophic shock of low, low prices.

Still, some good value homes.

Not sure if I could live in a reposessed home.

PasturesNew

owitemisermusa wrote: »

Hmm.... wasn't as bad as I thought. I was expecting a catastrophic shock of low, low prices.

Still, some good value homes.

Not sure if I could live in a reposessed home.

It's a tricky call. To buy or not to buy.
What was the personal tragedy that lead to the repo.
Where are they now.
Do they bear any grudges.... (big one that).

And going round their home and knowing that possibly the kitchen top you're making your toast on is part of the borrowing they did that tipped them over the edge.

It's a shame when people have bought a house, then done it up with money from credit and that's what's been the catalyst of their downfall.

I think it would be hard to live with it as it is, yet I'd be touched by the tragedy of their loss if I tried to alter it.

Imagine stripping off new wallpaper, knowing they spent £20/roll on it just a year before .... tragedy.

neverdespairgirl

merlinthehappypig wrote: »

There have been so many posts in recents months about the relative benefits of buying versus renting in the current market.

All of the examples I have seen, including mine, have been based on hypothetical situations.
.

I've posted real life examples, such as http://forums.moneysavingexpert.com/showpost.html?p=9701479&postcount=1964:

"This same place in WC1 is both for sale and for rent. For rent, it's £795 per week. For sale, it's £1.1 million. I work that out as being a gross yield, not including fees, maintaining it, all the rest of it, as well under 4%.

http://www.rightmove.co.uk/viewdetai...a_n=2&tr_t=buy

http://www.rightmove.co.uk/viewdetai..._n=3&tr_t=rent"