To ask if anyone choses to rent rather than buy?

[Walkaboutwendy]

Is there anyone who choses to rent rather than buy?

We are in the process of selling up and stepping off the ladder for a bit. I'm musing as to whether there's another way than jumping straight back into a mortgage debt.

If you knew you had money in the bank (a passive income for life to pay the rent that would keep pace with inflation) would you chose to buy?

I'm weighing up the pros and cons so would really appreciate different views.

No, not in that situation. Anything that goes wrong isn't your problem, you can move where you like and upsize/downsize with ease.

We chose to rent...we sold our small house because we couldnt afford to buy a bigger house in a better area but could, however, afford to privately rent this type of house.

When the kids are older/moved out then we will hopefully buy property again. A small house or flat for the two of us. We still kept the equity from the house sale and have earned a bit more through investing some of it. Our old house has recently sold at 10k less than when we sold it. Swings and roundabouts.

Don't rent if you can buy unless you can guarantee an exceptionally good landlord and a very long term lease. Unless you like moving house a lot.

You also need to ensure that your savings will cover your a accommodation costs for rest of your life.

Savings can tank, inflation can rise but at least if you have a roof over your head that you own then even if the markets go tits up you still have somewhere to live. I don't get why people would rent rather than buy if they are in a financial position to do so. Renting is just money down the drain and in all likelihood you will earn more interest on the increasing value of your house than what a lump sum of money would do in a bank (stock market investment would offer greater returns but you might end up with no house and no savings if the market crashes)

as Pascall , cant usually decorate as you wish make alterations have to maybe wait for repairs upgrades. may not be able to have pets just move on landlords whim only a few advantages to renting imo

Yes I would buy. Example

In bank 600, 000 pounds. Live till 90. Are forty. , Spend 1000 a month on rent. 12000 a year. For fifty years. Cost 600,000. Die, nothing to show for it.

In bank 600,000 pounds, live till 90.are forty. Spend 600,000 on new house. In fifty years house probably worth 6 million. Or whatever. Die. Leave it to family or charity.

I'd buy every time.

Renting is really only acceptable under certain conditions (student, saving, relocation) basically temporary.
Having your own shelter and being responsible for it is ideal.

"Bluntness100" But that is not a full comparison, you have assumed that the house raises in value over 50 years, but have not allowed the same for the cash option.

Assuming a fairly basic 4% (and as it should be invested in stocks over that length of time, that is very pessimistic) you're 600k would be worth around £4.4m within 50 years.

For me, it would depend which end of the market you’re talking about. Renting seems easier and more pleasant if you’re talking luxury top end where everything is nice.
Renting bottom end is precarious and as a tenant, you can be treated terribly.

No way - not in the UK anyway. I hated paying someone else's mortgage, having to go through a landlord/agent to sort anything out, property inspections, the constant fear that you were going to be given notice to quit (and the stress of having to find somewhere else when you were), not being able to attach anything to the walls...

Other countries have better tenant protection/ renting conventions but even then I would feel like I was throwing money away.

The amount of people I know in there late 40’s eary 50’s who have sold their property, rent and are living the high life on the equity. I think they’re crazy, what happens when they retire? Are they then entitled to social housing and the tax payer picks up the bill?

We choose to rent because we can only get a mortgage for a 2 bed flat where our jobs, support network, life since we were kids etc etc are and we have children. We rent an absolutely beautiful home that we love bringing the kids up in. We both work full time and paying half each doesn’t make it feel so expensive. We will buy our little apartment outright when we retire together.

Assuming a fairly basic 4% (and as it should be invested in stocks over that length of time, that is very pessimistic) you're 600k would be worth around £4.4m within 50 years

That's not right, because she would be depleting it annually on rent. In addition seldom if we look back over history will cash investments out weigh property in terms of value escalation. Long term you always make more out of bricks and mortar.

Bottom line is though she's depleting her cash reserve by paying rent
But by buying property she's increasing it.

I’ve been an owner for 14 years then a renter for 9 years now we’re back to owning.

At first renting seemed so ... free. Can move on if the area went down or didn’t suit after a while. One photo call and the boiler/shower/loo/drain/roof got mended without me having to get my purse out. No worries about interest rates.

Then after a while the not being able to decorate/put down firm roots/extend/change the garden/being like looked down on by the neighbors/lining someone else’s pocket got depressing.

I think most people rent as they can’t afford a house deposit.

I hated paying someone else's mortgage, having to go through a landlord/agent to sort anything out, property inspections, the constant fear that you were going to be given notice to quit (and the stress of having to find somewhere else when you were), not being able to attach anything to the walls...

And this. I've rented and my daughter rents. And it's a ball ache, from the inspections, to the rules be it no pets, no smoking, no painting, then the stress of your landlord deciding to sell up and you need to move, to not even being able to make any changes to make it yours, or rents escalating in your area making it unaffordable.

Not many people would chose to live in somone else's house if they could afford their own.

To match the rent we pay to buy our house (even before the higher costs owning would add like maintenance and insurance) we'd need 200,000 deposit. Once you add in the return on that 200,000 and the insurance and maintenance renting is significantly cheaper. Of course there's no asset at the end, and a highly leveraged gamble on the property market can pay very handsomely.

The fact though that rents are significantly lower than mortgages in this area though suggests that houses are over-valued, and the gamble severely limits you if you need to move. The risk on that gamble is very, very high.

We do however own elsewhere.

I rent because I have to. The moment I can buy, I will. I'm in a city with a rental crisis and we are at the whim of greedy, greedy landlords. It makes me sick.

Yes it’s true. Although we ‘choose’ to rent it’s only because we don’t have the ability to buy a house the size we need for the kids. So yes we could buy a flat and cram us all in but don’t want to do that to the kids for the sake of owning.

We have both been married and owned previously so the kids were already here so wasn’t the choice this time to buy then have kids. Bit late!

If you knew you had money in the bank (a passive income for life to pay the rent that would keep pace with inflation) would you chose to buy?

The passive income would probably be taxed at a higher rate than the imputed income you get in the form of free accommodation from a property you own.

The rent on my flat would be £30K per year. Let's say I have £40K per year passive income. Let's pretend someone else has identical circumstances and property, and that for some reason we decided to live in each other's flats and pay each other market rent. We'd be in exactly the same financial position as if we lived in our own properties, except that we'd be paying 40% tax on 30K of extra taxable income.

So by renting rather than owning our income would decrease by 1K a month, purely due to extra income tax.

We are renting at the moment, we moved solely to the area we are in for nursery/schooling but we would like to live in another village ideally.

Our plan is to wait until we have finished having children and then move when they are in primary school, both villages feed into the same high school so not an issue when they get older.

We also have a fantastic landlord (family friend) who lets us decorate how we wish, doesn't mind us having pets and the rent is reasonable for the house / area we live. They are looking for someone to stay long term and then they are planning to sell to fund their retirement.

For now our plans are on the same timeline so it works out for everyone.

Of course there's no asset at the end, and a highly leveraged gamble on the property market can pay very handsomely

You kind of threw this in at the end. Of course renting isn't cheaper. Because precisely that,, you have the asset and any equity in it if you buy. You get your money back when you sell depending on timing and escalation, but ultimately long term you do. Do you know rhe average house price fifty years ago? It was two grand!

Renting you have nothing but the pleasure of living there.and you don't get your money back. You've nothing to sell. You get your exit inspection and you leave.

Jizzle that's kind of what I'm thinking. We are already in receipt of pensions that would cover rent and bills so no issue on paying the rent. Plus I'm on a good wage for all extras. So the lump would purely be invested and grown. No need to touch it really. I appreciate we are in a massively fortunate position and as weekfour said the experience is going to be very different dependant upon your postion.

If everything was taken care of by other means and you didn't have to touch the lump to live, what would you do?

I guess it's a question of how you feel based on what people are saying.

I resent slaving away for a mortgage on a property that will probably go down in value in the next few years and pumping money in to fix things when they break.

I'm just trying out a different way of thinking really.

We rent by choice. It was never supposed to be for so long (3 years so far) but we have no regrets.

Initially we did it because we had sold our house, and our onward house purchase fell through due to an awful survey. Rather than lose our buyer, we had to move out. We needed to be in catchment for DD in time for school applications, so we had no choice but to rent.

However, three years later we are very happy in the same house and have a good landlord. DD has settled nicely at the local secondary. We've invested our house equity and it makes a pretty decent contribution towards the rent. And locally house prices are definitely softening. So I think we'll rent for another 1-2 years and then buy again - probably somewhere very near to where we are now - and hopefully in a falling market.

I feel that it makes it much less stressful contemplating buying again - the tenancy & purchase can overlap a little bit and not being in a chain may make us more desirable buyers.

I am (ironically) a landlord myself so perhaps having seen it from the other side makes it less worrying. DH worries about our landlord deciding to sell up, though, because moving now would be a total PITA.