To ask who chooses to pay rent rather than buy?(227 Posts)
I am laid up at the moment and resorting to watching Homes under the Hammer etc. My query is who the dickens is choosing to pay £500 plus per month (some rentals are £1200+). Isn't this more than a mortgage? I'd be interested to know who renters are and why? Most of the properties are family homes rather than student lets etc so why would a 'grown up' choose to give their money to a landlord rather than service a mortgage?
Also the interest rate has been ridiculously low for a few years now which means that people have either switched to very low interest only repayments or their capital and interest repayments are just lower.
It also means that with an interest rate so much lower than inflation, savings are losing value all the time and when people are faced with saving for years to raise a mortgage and seeing the value of those savings drop all the time, it's like swimming upstream.
Anyone would think they wanted people to spend instead of save...
Because my rent is £400pcm. And then I have very few repair costs.
The mortgage on an equivalent house would be £800pcm plus all the running costs that comes with owning.
We bought our first property in 1999, we weren't planning to buy but our landlord was selling, we put down deposit (90%) and fees were less than £10k and landlord left all furniture and appliances. If took all our savings by at the time saved us £200 a month in rent. It was a no brainer for us.
I still live in that same area (in South East), neighbours and friends with kids pay between £1,500- &2,000 pm for 2 or 3 bed flats. Many would live to buy but nee £100k for a 20% deposit, they can't save because rent takes up so much of their income, but they are toed to the South East because of work.
fluffiphlox - can't you work most of this out for yourself? the news is full of stories about how big deposits need to be, how x number of new houses are needed, banks not lending, etc.
tbf catriona mortgages, unless on a fixed rate go up (and down) in price aswell from year to year.
We rent because we have two other mortgages. Reluctant landlords and reluctant tenants. It is quite nice though. I like not feeling responsible for getting things fixed.
OP, genuine question, how do you not know about this stuff?
I needed 30-40k to buy a 250k house on a rubbish interest rate..... That's why I rent as I don't have the deposit. Eats me up inside at the lack of pension / inheritance/ moving my son from school to school and feeling lile imnever able to give him a proper home.
Also the fact the mortgage would probably be half the rent.
But oh hum it's the world we live in
I'm in my late 30s and a graduate professional.
I don't know anyone else in this position (or younger) who bought without help from their parents - anything from parents giving an interest free house loan to the children; to the parents buying a flat/small house as a wedding present; a living inheritance; parents giving the deposit; parents 'investing' in the house hoping to recoup that when the house is sold at a much higher price...
I'm not saying there aren't any who haven't done it without help, but I don't know any personally.
Oh my god! You're completely right, what have I been doing all this time?! I'm so glad you pointed it out. I'll go get a mortgage right now. Silly me.
Unlike some posters above, I love in the cheaper North of England. House prices are lower and 3 years ago we managed to buy a 'bargain house' costing £85. We still had to put down a £15k deposit and jump through hoops to get a descent mortgage.
5 years before that my DH had bought a house with his friend for £120k with no deposit and walked into the mortgage. Luckily he got out of that before the house price fell and he suffered any loss
Folkgirl I don't know anyone either who didn't get some sort of 'help'.
Catriona100. You seem very cross with me. I am out of touch with house buying, as I say, having not moved since 2000. I see my house as a home not as an investment or a pension, so I don't keep an eye on property. I am injured and in front of daytime telly. I was surprised at the cost of renting what seemed to be rather modest houses.
I live in a market town where a lot of toy town type houses are being built so I'm guessing there's a market. I had no idea that 40% deposits were required. In my day it was 5% if anything.
My initial query as why anyone would choose to pay rent rather than buy. I now see that it offers many people peace of mind, in that they don't have to worry about 'extras'.
Of course, were you living in certain areas of Spain or Ireland (where some properties have lost up to 75% of their value) then you would have been asking why anyone would ever choose to take on the huge risk of ownership.....
And there, in a nutshell, is your answer. In a politically stable environment, with stable supply/demand there is virtually no financial difference between buying and renting. Renting will be cheaper than a repayment mortgage but if you put the difference into a savings account earning libor, then after 25 years the cash saved up would be enough to buy the same property outright as you would have brought on a mtgge 25 years previously.
Thing is, we have politics, inflation and unbalanced supply/demand which buggers up the whole landscape, meaning that whichever side of the buy/rent market you sit on, you are taking a very serious gamble, with very serious money. And should you think "house prices have beaten inflation and other types of investment because of demand, so are a safer bet" or "house prices have beaten inflation and other investments, so must be due a huge downward correction and are therefore a very risky bet"? Which one is it to be? No one can answer that. Demand of course would collapse if we left the EU and all the immigrants were asked to leave
not sure the daily mail will be taking that stance any time soon - just as has happened in Spain with the whole 'second home' community fleeing for the hills.
Many other countries think the British are barking mad for our obsession with ownership, by the way.
do you think people have a choice it isnt as easy as you think to get a mortgage or raise a deposit it isn't all about the monthly mortgage imo there is a 101 other factors involved
our first house brought in 1996 deposits and fees was less than £5000 probably closer to 4 than 5. fast forward a fair few years, get divorced, split the equity (had moved house several times since so equity not as much as you'd assume) xh with a salary of £100k plus goes off and buys himself a lovely house no problems. Me salary of £38k can't get a mortgage for anywhere near big enough, for me and the 4 dc. Im talking 3 bed emis, not large detached houses. If i moved away from the area, i'd need to find a new job or have longer ours childcare, move the dc school (eldest is yr 11 so mid gcse)away from family who help out with a lot fo the childcare especially school holidays.
Plus or practical reasons, now i finally have a decent landlady who carries out repairs and has left me in a better position to be renting than buying. also if i was to buy my mortgage would be in the region of £1300 a month and my rent is a couple of hundred a month cheaper than that.
I'd like to see a complete change in attitude about renting and suspect we are moving towards it. For too long there's been an obsession with "getting onto the property ladder" in the UK. Regardless of the practicality or affordability. Which has undoubtedly helped to create the boom and bust conditions so far as property prices are concerned. Few countries in Europe seem to put this pressure on people to buy or create the impression that renting is some sort of second class option.
For people with average incomes, owning a house doesn't mean you are sitting on a gold mine. Any money made in equity will be balanced by the need to buy another property and certainly, very few people sit down and work out the hidden costs of house ownership. We're about to sell our house. It has risen in value quite ludicrously, in the years since it was bought but that so-called profit will have to go into buying the next house. If I added up the money we've spent on this house over the years we'd be making a loss on the initial investment.
Oh dear OP, poor you!
This is the very basic principle that lies behind the global economic recession that we are currently in! It's all because house prices were seen as some sort of golden goose and people have got into more and more debt buying houses - which are actually, very very overpriced.
So the world is now in recession and there is no way to get out of it without a lot of pain.
I rent, by the way - I'm divorced and there's no way I can buy a house with a single salary.
I'm not cross, OP. I Just started to answer your questions and then it hit me, that your questions are so basic (sorry but they really are), that i was wondering whether you are some sort of researcher trying to find out whether the general public has any basic understanding of economics as applied to the property market.
I would be cross however, if I thought you could work all this out but its just easier to get other people to do the thinking for you!
OP here. Yes none of my grandparents owned. Renting was the norm for them. We seem to have got into home ownership since perhaps the 60s?
You do seem rather obsessed by the element of chooice in buying or renting, OP. For many people choice is not a luxury they can exercise.
I have no chance of getting a mortgage. The cheapest flats in London are about 200K. Imagine I need at least 10% and probably more. I need to save 20K. How the arse am I supposed to do that when I also have to shell out £500 a month on rent?
Beyond that, house prices are so ridiculous that I'd be tied into the bloody house til I'm 150 years old.
It's just not an option for a lot of people.
Fluffiphlox I realize you dont realize and Im not having a go at you, but its talking about who chooses and whose making that choice as if it was a decision and everyone had a choice, that stings some and is why youre getting curt treatment.
I very rarely object to people not being aware of just how different others lives may be, but even I find the wording painful.
Unless a miracle happens (ie lottery) I will never own my home, (have been reprimanded for talking about 'my home' and told it is neither mine, nor a home, and is a 'dwelling unit') I will always live without basic security and at the whim of others. I worry hugely about if my dcs and dgcs will be ok and able to have work and keep a roof over their heads. They lose any right to be here as soon as they reach school leaving age.
Right now the government is looking to remove people who cant afford higher rents without help from areas that are popular, which equal higher rents and higher employment opportunities, and decant them to areas of mass unemployment into abandoned and hard to let housing thats being brought up by speculators keen to make money. Those able to buy them up will do well, but there will be little work for the poor souls forced into these places and they will not be choosing anything. Housing, and the repercussions of it, are very precarious for many.
A lot of young adults are not expecting to be in their current job for long.
Or same sort of job, but gets posted to a different are or even country. And/or they have dreams of going travelling.
So 6 to 12 months renting at a time suits them.
When we bought our house 20 years ago the bank wanted a deposit of 40%, due to dh's low income. Fortunately, dh is extremely economical and we had been engaged for many years.
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