Not sure if I want to buy a house, anyone else decided not to?

[Drumstick38]

I earn minimum wage, though I am currently applying for higher paid roles.
I have zero debt apart from student loans which is good, and about £1700 in savings.
I can't see how I could ever afford a deposit, as well as all the associated fees. I'm in Greater Manchester and having to look in Bolton, Wigan, Rochdale etc. As everything else is much more expensive.

Aside from this, I think the responsibility of paying a mortgage would be too much for me. I've already lost money this week due to having Covid and having to isolate, I'd be too worried about losing my job or something and not being able to pay.

The repair and maintenance costs are a factor too of buying a house.

I like the flexibility of renting, I don't have any pets and I like that more responsibility falls on the landlord.

The thing that people seem concerned about is in retirement age, and whether people can afford to keep renting, but surely there must be solutions?

Anyone else in a similar situation?

I don't really want to have something to show for it , I just want a roof over my head that I like.
The majority of my friends in that circle bought in their mid 20s, the only ones who didn't live in London.
I think other countries have a different attitude towards renting, such as Germany, it's more acceptable among working professionals, it's a shame it's not like that here.

I would like to buy, but we have been outbid on the last few offers we have made. I'm so fed up of it all that we have now decided to stay put in rented accommodation for the time being. I also worry about what we will do in our old age and have considered buying a small inexpensive flat and just paying it off. There is a stigma attached to renting but at the end of the day we are all working hard to put a roof over our heads just like the next person with a mortgage. There is no shame in that.

They will be under a lot of stress if a life event such as redundancy occurs.
Are renters immune from reduction of income that comes with redundancy? I thought rent had to be paid regardless. Maybe landlords are getting kinder with age 😂

I am coming from the point of view of owning a property in Manchester.
I bought a house in an area I wouldn’t have previously considered and have gone from 0% to 35% equity in 3 years due to house prices booming.
Maintenance does cost but depends on the property and if it’s a doer upper.
It’s anecdotal but a situation that appeared in the show Manctopia recently happened to a friend- had private rented property for years but then served s21 as landlord wanted to move back. Found she had been vastly priced out of her area and has had to move her child from their primary school too as they moved further out of the city to afford it.
My mortgage is way less than the rent I used to pay.

@FTEngineerM obviously not, but renters can get help with housing costs more easily than homeowners .

It's wrong that people are worrying about how they'll afford to live in old age if they aren't homeowners.
I agree it does smack of privilege, it's simply not a commitment that everybody wants to make.

I think the idea of a house as an asset can be overrated. Renting isn’t really £100k down the drain/with nothing to show for it-you have the years you lived at the property to show for it. Yes you can make money when you sell your house, but at the end of the day, a lot of the time your house ends up being sold to pay for care in your old age (which the govt would pay for if you didn’t have this asset). Or the money then goes to your children, which is a nice gift to leave them but shouldn’t influence your decisions too much when you’re young. I think you notice the large outgoings for maintenance costs more than you’d miss the lack of an asset to pass on to children/pay for elderly care/any money you’d make from a house sale.

@PassionfruitOrangeGuava

God, the whole ‘renting is money down the drain!’ thing is irritating and exhausting isn’t it?

It’s payment for a roof over your head. Just because you don’t own the roof in the end doesn’t make it wasted money. You spent those years with a home for crying out loud. It’s like saying eating food is money down the drain because once it’s provided it’s nutritional value you no longer own it.

Nine times out of ten it’s spoken by someone who can’t understand the idea that not everyone can buy and that for many renting is a permanent situation. It just smacks of privilege.

I think it’s your circle of friends OP. I’ve had friendship circles where buying literally never came up as it wasn’t even tangentially realistic as an option. And circles where nobody rented.

Laugh it off, ‘I’m happy where I am for now thanks’ or if you want to be more direct (which I recommend) a ‘huh, what a personal question!’ And subject change.

I think you've misunderstood. Obviously everybody needs a place to live and it's worth paying for that. But if you have the choice between paying that money and eventually owning the property - so no longer having any housing costs to pay at all, and having an asset you can eventually leave to children etc - or just paying and ending up with nothing at the end, it's pretty obvious which option is preferable!

There are lots of variables around incomes, jobs, recessions, interest rates etc of course. I think the discussion here has been pretty nuanced and caveated in that respect. But to say that for most people who can buy it is usually the best option is pretty reasonable based on historical data, although clearly nobody is claiming that they can predict the future.

And nobody implied that everyone can buy if they wish to, we all know that is sadly not the case. And never has been tbh. The OP's question was about whether she should if she can.

As for priviledge, ha! I left home at 16 with nothing and now own a lovely house. Comments like this seem to come from a place where there are very large chips on shoulders.

@FTEngineerM also , I was describing my own experiences with my own social circle. If I was made redundant , it would be a lot easier to cover my rent payments than it would to cover the huge mortgage payments in my social circle .

@Drumstick38

I don't really want to have something to show for it , I just want a roof over my head that I like. The majority of my friends in that circle bought in their mid 20s, the only ones who didn't live in London. I think other countries have a different attitude towards renting, such as Germany, it's more acceptable among working professionals, it's a shame it's not like that here.

It's not so much about attitude. The attitude comes from the fact that the rental market works very differently there. It's much more secure for a start. So many people rent until their 30s or so and lots of people then build their own home.

Unless I win the lottery*, I never would.
Tbf I can't afford it, but if I could just about aford it scraping by then no way.
I'm in the fortunate position to have a HA home with a lifetime tenancy.
*I don't actually play it!

@Drumstick38

I don't really want to have something to show for it , I just want a roof over my head that I like. The majority of my friends in that circle bought in their mid 20s, the only ones who didn't live in London. I think other countries have a different attitude towards renting, such as Germany, it's more acceptable among working professionals, it's a shame it's not like that here.

By sometime to show for it I mean capital, a rent free, secure place to live or a nest egg to sell and use to go travel the world in your old age. So if you can afford it, even if it may mean money is a bit tighter in the shorter term, in the longer term it will be a huge help in your retirement years. Obviously not everyone can afford it though and there are benefits to renting too!

I think buying is good, but only buy what you can afford. I rented until late 30s. A long term tenant, I would need to move when properties got sold. I rented so long as I was determined mortgage payments would be under 30% of my after tax wage. Houses I could afford at that payment were a lengthy commute to the city.

Everything sort of fell into place when the last place sold. The agent knew of units locally where I could have pets - I'd never considered units as most weren't pet friendly.

Long story short, I ended up buying a 2 bed unit (was in a 3 bed house). Interestingly, the living spaces in the unit are larger than the house as it was poorly set out.

Mortgage repayments were the same as I was paying in rent. This is where the difference comes in. The property went up $70k in value in 4 years (I refinanced). There's no way I could have invested funds and got that return. Repayments are now under 25% of my take home income, whereas rental prices have continued to rise.

So I think there is a tipping point where buying is a better option. Just because you haven't bought whilst young, doesn't mean you never will.

@Drumstick38

It's wrong that people are worrying about how they'll afford to live in old age if they aren't homeowners. I agree it does smack of privilege, it's simply not a commitment that everybody wants to make.

Hmmmm that's a tricky thing to unpick. I mean, obviously I agree everyone should have a home! But if somebody decides - as many PP have stated - they'd rather be carefree and have more money to spend on their DC than pay the cost of buying themselves a home, the result of that is that somebody has to pay their rent when they stop working. If it is a choice not to provide for their old age when they could have done, who should be taxed to pay for that? Those that have provided for themselves? Obviously we need to support those who can't afford to look after themselves but I think if someone consciously decides to spend their money that they could have saved/ invested (not even necessarily in property; in pensions etc if preferred) then it is a bit cheeky to then suddenly ask everyone else to stump up their rent for potentially 20-30 years after they retire.

@Babyroobs

If you can't afford your rent in your retirement years, it all gets paid for by benefits so YANBU if that is one of the main reasons you want to keep renting.

There's no way of knowing state benefits will still be available when OP retires.

I think the argument against renting is that after 25 years most people will be mortgage free and not having to find that money every month. Over time that payment will be lower in relative terms whereas rents will continue to rise.

Owning your own house is generally seen as more secure than renting.

Once your mortgage is paid off, you will have something to show for that money. That doesn't apply with renting.

Ah that’s true @QuickQuacker completely forgot that aspect 😀 and whilst I understand why the rules are in place it seems illogical in practice. As an example now I think of it, a family member has had to stop working to look after a family member can’t claim any (real) housing help because it’s mortgaged they said sell it live of the equity without claiming any benefits then come back to us and reclaim when you have nothing and we can help you with rent (!!!!!!) like, erm what?!

In reality there’s not much equity so it would just be a box ticking exercise to achieve nothing but moving from ownership to renting.

@TheLastBeach haha! No chips here (unfortunately, I’m ravenous), I too left home as a teen with nothing now own a property, with no help practical or financial from anyone. But I’m not tone deaf enough to walk around telling people who rent that renting is ‘money down the drain’ like many people seem to do. Do the people who say that really think the recipient is so thick they don’t understand the most basic differences between renting and property ownership?

Apparently there is an 18 year cycle with property booms and the next crash is due in 2024, so you might be able to pick something up for much cheaper than you think OP.

Do what's best for you. There is no shame in renting if that suits you. I do worry about old age and what the hell the government are going to do in 40 years when there are loads of pensioners needing housing because they haven't been able to afford to buy somewhere. I'm sure they won't care because the taxpayer will probably foot the bill and the politicians and their cronies will own most of the houses anyway, so they will probably benefit from it.

I do hope to buy in the next few years, but I think the housing market is artificially inflated at the moment and it feels too risky right now. Renting is shit also - expensive and not much choice. It's just dire all round really.

@OccaChocca

I think the argument against renting is that after 25 years most people will be mortgage free and not having to find that money every month. Over time that payment will be lower in relative terms whereas rents will continue to rise.

Owning your own house is generally seen as more secure than renting.

Once your mortgage is paid off, you will have something to show for that money. That doesn't apply with renting.

All great benefits to ownership.

The costs are definitely underestimated though, if we were to all add up:
Purchase price
Plus interest
Purchasing fees
Any remortgaging fees
Repairs
Insurances

Over the 25/30/35 year mortgage term the actual ‘cost’ would probably be astronomically different to what some might see as what they paid for their house - ‘purchase price’.

[quote PassionfruitOrangeGuava]@TheLastBeach haha! No chips here (unfortunately, I’m ravenous), I too left home as a teen with nothing now own a property, with no help practical or financial from anyone. But I’m not tone deaf enough to walk around telling people who rent that renting is ‘money down the drain’ like many people seem to do. Do the people who say that really think the recipient is so thick they don’t understand the most basic differences between renting and property ownership?[/quote]
Glad things have worked out for you too. I don't think anybody is saying that though. The thread was about whether it's wise for the OP to buy if she can, not to put down people who rent because they have no other option, or choose to for their own specific personal reasons which strangers on the internet would know nothing about.

@FTEngineerM

They will be under a lot of stress if a life event such as redundancy occurs. Are renters immune from reduction of income that comes with redundancy? I thought rent had to be paid regardless. Maybe landlords are getting kinder with age 😂

Housing costs are covered by benefits if you rent, not if you have a mortgage.

@FTEngineerM that is neglecting two key points though:

1. Rents tend to rise with inflation, at least. This matters over decades. A mortgage payment will not do so (although interest rates can go up and down - which is a separate risk that must be factored in - the amount owed is crystallised at the purchase date and not uprated).

2. Repair costs/ maintenance are generally factored into rents. Which is one reason we often hear complaints of people paying mortgages (even recently acquired ones) that are far lower than the rental cost for an identical property. (Obviously the fact that the mortgage payer has also paid a deposit is also relevant, so their monthly payments as a FTB may be for the 80-90% of the property that they do not yet own, whereas a rent is paying for 100% that they don't own. But maintenance costs pay a key part in the differential between rent and mortgage payments: it's a myth that renters don't pay these costs. They do, but as a standard monthly charge).

As for your other points, in proportion to housing costs, legal fees and mortgage fees are minimal. Stamp duty is shocking, of course. However renters pay agency fees etc and also pay more frequent removal costs in general. So I think all of that is fairly irrelevant in the scheme of things.

GoodMove forecasting predicts the average house price to be £251k in 2025 and this will rise 64% to £392k in 2050.

So if you take a 25 year mortgage out for a house at that cost by the time you will have paid it off you will have:

Mortgage - £392k
Renting - £0

So if you can afford it, absolutely go for it.

@MediocrePenguin

If you can anyway afford it I'd 100% go for it. If you don't you end up paying someone else's mortgage for them and have nothing go show for it at the end. Property is the best investment you'll ever make. End of. House prices over the years rise exponentially.

Except when they don't. In a certain large city in the midlands a flat I bought made less than purchase plus interest on resale.