To think rent is so bloody unfair

[Tar19891]

My rent is 800 per month. A mortgage on the same value flat would be 450 per month. Not in London obviously. It’s not fair is it?

@SmolCat and this is the point that I made to my children and hopefully by the point being made on Mumsnet some of it will filter down to the next generation of children even if their parents have missed the boat so to speak the kids to make sure that they don’t. Mine have the lifetime ISA’a opened the moment they turned 18 it happens they haven’t needed to use it for the deposit, they took proper jobs during the holidays between A levels and university and with three months wage slips were given a mortgage at 95% in a reasonable area by their uni.

They will obviously not pay rent to anyone whilst at university and then rent out to other students or sell it when they leave but even with just minimal has price inflation they will now have 25% to put down on the next house that they choose.

None of this stuff is rocket science and I don’t mean that in a condescending patronising way but all this information is out on the Internet even if you don’t have actual family support encouraging this.

Thanks. I appreciate that it's based on what it was bought for in 2015 but how does that equate now? Therefore, if you were to buy now, what would the numbers be? Definitely not being arsey but just interested.

Much harder for me to calculate as it's hard to tie a recent sale price with a rental price on the same property.

But

• similar flat in a slightly grottier area down the road has just sold for £140,000
• similar flat in a slightly nicer area down the road with an added garage has just gone for £175,000
• similar flat in a noticeably nicer area up the road is on the market for £235,000 (but it's overpriced as it's still on the market after a month).

I couldn't find any 2 bed flats with a garden and parking in the area to let on Zoopla but similar houses in better condition in slightly nicer areas are up for £700, £995 and £1100.

All the above is asking prices not land registry prices.

they took proper jobs during the holidays between A levels and university

How did they get those proper jobs? And which decade was this

When I was finishing A Levels / at university (early 2010s) I found it hard to even get zero hours bar work, because most employers didn't want to take on staff knowing they'd disappear at the end of the holidays. I was well presented, well spoken and all the rest of it, but like many I struggled to find decent holiday work.

Those who got "proper jobs" in the holidays always seemed to have professional parents, some of them going into paid holiday jobs at their parents firm, and others through their parents' connections.

Being not long after the credit crunch I cannot possibly imagine that they would have given a mortgage to an 18/19 year old me on the basis of 3 months bar work on a zero hours contract.

they took proper jobs during the holidays between A levels and university and with three months wage slips were given a mortgage at 95% in a reasonable area by their uni.
I’m a bit confused, can you explain the timeline? (I’m not being rude, I genuinely want to know how other young people can achieve this.)

1. So your childr finished ALevels in June and got a temporary job for three months. In September they gave three months worth of wage slips to the mortgage lenders as proof of income. Except it wasn’t proof of income because they had left the job? So the lenders knew they’d be receiving £0 income from employment and still gave them a mortgage?

2. How could they have saved for a deposit and fees in that time? There’s no way they earned something like £15k+ in three months?

3. How did they do all this in time for a house share in Uni? They finished their job in September and got the mortgage AIP and found a house, exchanged and completed all by October? Especially while conveyancing is as backed up as it currently is?
   (And their friends held out looking for another place, risked it all going tits up and waited on them so they could share together? My experience of uni housing is that you sort it months and months prior.)

@smolcat
So my children don’t share with other people so nobody else was relying on this transaction.

They did not need 15 grand by way of deposit. £6,000 in fact. Which they had earned in summer jobs and the governments 500 quid they gave them for the baby bonus back in the 2000s.

A-levels were finished by May but they actually already started work by then so they had the three months wage slips by the end of July.

They could have continued in their role beyond October had they chosen to so at the time of signing the mortgage paperwork nothing had changed in their lives.

The property completed beginning of September.

[quote Nothappyatwork]@smolcat
So my children don’t share with other people so nobody else was relying on this transaction.

They did not need 15 grand by way of deposit. £6,000 in fact. Which they had earned in summer jobs and the governments 500 quid they gave them for the baby bonus back in the 2000s.

A-levels were finished by May but they actually already started work by then so they had the three months wage slips by the end of July.

They could have continued in their role beyond October had they chosen to so at the time of signing the mortgage paperwork nothing had changed in their lives.

The property completed beginning of September.[/quote]
Back of the envelope calculation suggests your children were being paid around £13 per hour, working full time for 3 months, and didn't have a penny in outgoings.

Remind me how they got this exceptionally well paid summer job?

So it depends where they go to uni then and if they’re happy to be alone. If their course is somewhere in a popular/expensive city you could need a lot more.

And they were really to have those jobs too and no outgoings!

It’s not impossible but it’s a definite choice and depends on circumstances and luck as much as drive.

@DietOrDie.

Ok thanks. So if we use the mid of those examples and take out a 25 year mortgage with 5% deposit:

Value: £175,000
Deposit: £8750
Rate: 2.45%
Mortgage: £741/month

Obviously this may not be an identical scenario to yours but if you're saying that the rental on this might be £995 then the gulf isn't quite as large, when using current house prices (although a difference of around £250 is still high.

@SmolCat
It’s not luck where they make a choice to attend university. It’s not luck that they have the skills required to earn more than minimum wage, although they didn’t earn a lot more. It’s not luck that they had a contribution from the government as all children did who were born circa 2000 .

And actually it’s not luck that they didn’t have any outgoings because I actually receive tax credits for them to support them throughout the time that they were working.
This is all down to decision-making. And again I do appreciate that not everybody knows how to navigate their way through the system I only know because I learnt the hard way repeatedly but we’ve got there in the end and hopefully if people read this and they take it in the spirit of which it’s intended to they’ll be able to help themselves too.

It is entirely down to changing your mindset and your mentality. I had a friend who I helped to get themselves on the housing ladder, was not easy with lots of people doing them favours. Upon moving into the property that they chose, the first thing she did was take out a 10 grand loan to do a bathroom up, within 12 months she split up with a husband who apparently had been abusing her for five years mentally, shame she didn’t flag that before they bought the house. And upon splitting the proceeds of the property she spent every friggin penny of it doing up the garden in her new rental house. Some people you literally can’t help.

@Nothappyatwork I did say it depends on circumstances and luck. Not just luck.

It’s not luck where they make a choice to attend university.
It depends on where the courses are available, where you get offers and whether you make the grades for them. It’s definitely not solely choice. (But if you’re putting buying a house above your education then choice plays a bigger part.)

It’s not luck that they have the skills required to earn more than minimum wage, although they didn’t earn a lot more.
Are you sure they didn’t earn a lot more than minimum wage? Minimum wage was £6.56 for 18-20yr olds last year. They saved £6k in three months on just above £6.56/hr? (And also, like I said before, £6k is incredibly low for a deposit, fees, etc. Many 18yr olds would either need to have saved more or would need a bit of luck that there was a cheap enough place on the market available at a very specific time without a long chain in order to close in 4-6weeks to start with.)

And actually it’s not luck that they didn’t have any outgoings because I actually receive tax credits
You were able to support them. Not all parents would. Again, down to circumstance.

I agree with you in part but I do still think you’re being naive and overly simplistic by ignoring realities.

[quote Lunar27]@DietOrDie.

Ok thanks. So if we use the mid of those examples and take out a 25 year mortgage with 5% deposit:

Value: £175,000
Deposit: £8750
Rate: 2.45%
Mortgage: £741/month

Obviously this may not be an identical scenario to yours but if you're saying that the rental on this might be £995 then the gulf isn't quite as large, when using current house prices (although a difference of around £250 is still high.[/quote]
I'd dispute your figures as
a) the flats I could find on the sale market were more comparable to my current place than the ones I could find to rent, which were much nicer (and houses not flats) so we weren't comparing like with like
b) the highest of the 3 flats I linked to was overpriced, which is why it hasn't sold, so I'd exclude it from the calculation tbh, and the second flat was better (has a garage)
c) I calculated on the basis of a 10% deposit, whereas you used a 5% deposit
d) interest rates obviously substantially change the amount you'd pay, and you used a higher rate than the default on the HSBC calculator which is what I used (1.7%)

If I recalculated based on the average of the first two properties (£157,500) with a 10% deposit and a 1.7% interest rate and a 25 year term then it's £580/month. Of course if I increase the interest rate to 3% then repayments are £672/month.

Either of us could massage the figures in a number of different directions tbh, depending on how we calculate it.

My parents always told me not to rent. I was lucky and bought in the early 90s with a 3.5deposit which ex and I saved for. Bought the house for £63k (London) with exH and sold it seven years later to buy a bigger house in a better area. Made over £100k. I was lucky. Am now mortgage free at 50.

I said the same thing to my kids - please don't rent! My daughter is 23 and has been saving since she started work at 18 - doesn't pay any rent at home and has saved enough to buy a place next year with her boyfriend. I'm so happy she will never be caught in the rental trap. Hopefully my son will do the same.

My friends daughter of the same age is about to rent in London with her boyfriend and it will cost them about £1000 each, every month. My friend is so concerned as has said daughter and boyfriend could live at home rent free for as long as it takes to save a deposit. They both have good jobs in London so can afford the rent but won't be able to save to buy. She's worried they'll never be able to get on the housing ladder. I would be too.

My neice and nephew both bought their own places at 27 and 29 - lived at home before after uni then saved up.

I'm about to buy a second place which I will rent out at a fair cost.

My partner's tenants have just moved out and have left his place in such an awful state. It's going to cost him over £5k to get it fixed. It's in London and worth over £770k but he's having to pay £40 a day just parking for his builder/decorator plus gardener who each him cost £200 a day. He's taking a break from being a landlord.

It’s not luck that they have the skills required to earn more than minimum wage, although they didn’t earn a lot more.
£6,000 in fact. Which they had earned in summer jobs and the governments 500 quid they gave them for the baby bonus back in the 2000s.

Ok so they earned £5500 in three months; let's say that's 12 weeks. Min wage for their age group last year was £6.56 and you say they earned slightly more than that; let's say they earned £6.75 per hour for the sake of argument.

To earn that they'd have to have worked 67.9 hours per week, every week

Even if it was £7ph they'd have to have worked 65.5 hours per week, every week

If they'd worked a more normal 35 hours per week they'd have to have been on £13.09 per hour.

Something in your story isn't adding up.

"- not paying out high rates of housing benefit to private landlords, which is a never-ending cost, where the money will never be seen again "

Where do you think the money goes? does the landlord burn it? Or does s/he return it to the system by employing people, buying goods that people make, paying taxes, etc?

Interesting idea that because a mortgage would cost £450 a month today at record low interest rates, it would be that over the 25-40 year term of the mortgage. When we first took out a mortgage rates were £12%. That would be about £2500 a month for one that's £450 a month today. Ouch. Makes the rent look cheap, though.

@DietOrDie

You're talking as if I'm trying to have one over on you, which isn't the case at all. You provided info which you said was not exactly representative and I was just trying to make head/tail of it.

For info I used comparethemarket and picked the cheapest mortgage from the list and minimum deposit. But clearly if you have a 10% deposit then really I should be asking why you're not already applying for a mortgage? If not, the amount of deposit is a bit moot as most people renting would buy if they had £15k in the bank.

It goes without saying that there can be a myriad cases with a mortgage and the example I put up was just one.

@DietOrDie

It’s not luck that they have the skills required to earn more than minimum wage, although they didn’t earn a lot more. £6,000 in fact. Which they had earned in summer jobs and the governments 500 quid they gave them for the baby bonus back in the 2000s.

Ok so they earned £5500 in three months; let's say that's 12 weeks. Min wage for their age group last year was £6.56 and you say they earned slightly more than that; let's say they earned £6.75 per hour for the sake of argument.

To earn that they'd have to have worked 67.9 hours per week, every week

Even if it was £7ph they'd have to have worked 65.5 hours per week, every week

If they'd worked a more normal 35 hours per week they'd have to have been on £13.09 per hour.

Something in your story isn't adding up.

Your maths isn’t including the child Isa which I made very clear was part of the calculations and was also given to every child born circa 2000 This is the trouble when you try and pick peoples lives apart and you do not know all the facts and I don’t intend to give you all the facts in the exact numbers because they’re none of your business, however just look generally.

Also not every organisation pays different bandings of minimum wage based on age. Indeed many supermarkets dont, not that they worked in supermarkets but friends kids do and are on £9 an hour

Your maths isn’t including the child Isa which I made very clear was part of the calculations and was also given to every child born circa 2000
This is the trouble when you try and pick peoples lives apart and you do not know all the facts and I don’t intend to give you all the facts in the exact numbers because they’re none of your business, however just look generally.

You said it was £500 and the deposit was £6000 so I calculated on the basis of needing to earn £5500.

I was born well before the child trust funds came in and was too young to have children of my own before the scheme ended.

@gogohm

That's interesting, thanks. Just goes to show how variable it is as that's way more extreme than my case.

Oh I also I see you’re assuming when I say summer jobs I mean that one summer job in the lead up to them applying for the mortgage.
No wonder your maths doesn’t work.

@DietOrDie

The calculation isn’t correct.

1. You can’t get BTL mortgages with a 10% deposit - 25% is the usual minimum, although some places allow 20% (at a higher rate)

1. BTL mortgages have higher interest rates than residential ones, so 1.7% is very unlikely.

There is also a formula the banks use to specify the minimum rent acceptable for a BTL mortgage. It’s something along the lines of 150% of the mortgage amount x stress interest rate (5.5%) / 12

So for a £100,000 mortgage the bank would need you to prove you can get at least £690 pm rent. These stipulations also feed into the rent charged.

There’s also maintenance, insurance, costs of renting eg safety certificate, agents fees, repairs, upgrades, service charges )if applicable) accountancy costs and making a profit in the meantime. Being a landlord isn’t a social enterprise, it involves risk. Landlords are entitled to both a short term and longer term gain. Should a business owner not be allowed to extract any income from a business because the value of the business is increasing.
Life isn’t fair, it has never been fair and never will be. If you spend your life looking for everything to be fair, you’re going to waste a lot of it. The question to ask is, do you have a home you’re happy with? If not you need to change something so you are happy

@DietOrDie

*Your maths isn’t including the child Isa which I made very clear was part of the calculations and was also given to every child born circa 2000 This is the trouble when you try and pick peoples lives apart and you do not know all the facts and I don’t intend to give you all the facts in the exact numbers because they’re none of your business, however just look generally.*

You said it was £500 and the deposit was £6000 so I calculated on the basis of needing to earn £5500.

I was born well before the child trust funds came in and was too young to have children of my own before the scheme ended.

£500 given to them in 2000 and invested in an ISA was not going to be £500 when it was cashed in 18 years later was it …. I assumed that didn’t need saying …. I’m starting to see where the problem is @DietOrDie

For info I used comparethemarket and picked the cheapest mortgage from the list and minimum deposit. But clearly if you have a 10% deposit then really I should be asking why you're not already applying for a mortgage? If not, the amount of deposit is a bit moot as most people renting would buy if they had £15k in the bank.

I said upthread that I've recently been lucky enough to come into some money which has allowed me to buy. Good job too as my landlord is evicting and (being a self employed dog owner) I doubt I'd find another landlord willing to let to me. I would probably have been street homeless if I hadn't been incredibly lucky at just the right time.

Being self employed and having had my income utterly devastated by covid (my entire industry was banned from working) many mortgage providers have been unwilling to offer me any mortgage at all. At one point banks were automatically rejecting anyone who had claimed SEISS. They also require several years of accounts to prove self employed income whilst a few months payslips would do.

It's not solely a matter of how much deposit you have in the bank.