Page 2 | to think it's financially better to rent vs buy?

EinyLinky · 2023-08-29T06:30:27+00:00

Hi, my situation is quite specific, so looking for opinions. I currently rent through a family member and only pay a few hundred a month for rent (it's usually triple that on the market) but it does have an issue that would make it not be possible to rent to the market anyway (10k to fix, but isn't an issue for me). I could afford to buy this place (with a mortgage) simply due to the condition (it really looks and feels fine, it's just more of a deeper wall damp issue, that I keep dehumidifiers running for). Family doesn't want to fix it and would rather just sell once I move, vs paying to have it fixed and it go up in more value than that costs. It's one bedroom. I'd be keen to buy a 2 bedroom place in around 5 years, but can't afford one right now, especially none in the rest of the parts of this town. There was one that did come up along this same road, but the condition inside wasn't liveable and I'd not really be able to then afford to do it up. I'm better to keep renting at my cheap price and buy in 5 years, with first time buyer discount, etc. etc. that I could actually live in for a considerable time (as it's 2 bedroom). Right? Or is it actually best to just get on the property ladder ASAP with what I can afford? Thanks

Zanatdy · 29/08/2023 08:07

Tumbleweed101 · 29/08/2023 07:33

If you can stay there for next five years at the cheaper rate of rent without the risk of it being sold I'd probably stay and save like mad to be able to get the property you really want in the future.

This is what I’d do. Mortgage rates are very high right now, and prices are going to drop of houses. But if you’re getting a cheap property that won’t matter so much

Lillianofthevalley · 29/08/2023 08:08

Who said its 10k to fix? What is the damp issue?

thatsn0tmyname · 29/08/2023 08:09

How old are you? I would say that in 5 years time you'll be 5 years older and stretching a mortgage term into retirement is tricky. If the sums add up, getting on the ladder now could be sensible.

Layinwait · 29/08/2023 08:10

How old are you op and what are your personal circumstances ie in a serious relationship? In a stable job? Plans to travel?

NoSquirrels · 29/08/2023 08:13

Usually it’s better to buy than rent.

But in your specific scenario, I’d save like mad (you’ll never have this opportunity again!) and put yourself in a good position to buy a bigger property somewhere you want to stay a bit longer.

I think you’d always have mixed feelings if you bought this flat. And the offer will (presumably?) always be open to you at any time if you change your mind.

Get saving!

declutteringmymind · 29/08/2023 08:24

Will the amount you 'lose' by wasting your ftb allowance outweigh how much money you lose in rent and any equity you may gain? Or would the price go down?

Original poster

EinyLinky · 29/08/2023 08:33

I'm almost 25, have a stable job, no plans to travel, not in a relationship, but have my pets 😂

It was assessed before I moved in, they said it's not suitable for rent and will be about 10k to fix the damp issue. Family member doesn't mind me staying here, says it benefits us both than him just selling right now (doesn't want to fix it). Had an awful tenant before who costed him a lot to evict, so think we are both happy 😂

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thdskdrggs · 29/08/2023 08:34

I think the first poster just read the title.

No I don't think it would be worth buying a house you don't want given the rent is so low; perhaps in a booming market it would, but house prices are stagnating, if rent is supposed to be triple presumably that saving outstrips the interest payments (currently especially), plus as you say the first time buyer benefits and maintenance costs.

So long as you are utilising the savings you're making to build a deposit for a house purchase, I would say renting is wise in your situation.

Original poster

EinyLinky · 29/08/2023 08:36

Currently saving about 7k a year, I only have an easy access saver 😳 clearly need to jump on that government scheme one!

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JenWillsiam · 29/08/2023 08:37

EinyLinky · 29/08/2023 08:36

Currently saving about 7k a year, I only have an easy access saver 😳 clearly need to jump on that government scheme one!

Depends where you live in that case. Properties here go up by way more than per year so the longer you wait the further down the property market you’re falling. I’m not aware of many places where £7k a year is going to maintain what you can afford.

caringcarer · 29/08/2023 08:38

Sounds like you have a plan. Get your money into a LISA if you have not already got one. Government tops it up.

BarbaraofSeville · 29/08/2023 08:39

OP have a look at this.

https://www.moneysavingexpert.com/first-time-mortgage/

Lots of advice about preparing for a mortgage (Lifetime ISAs - free money from the Government, also making sure your credit file is in good shape and the costs of buying (surveys etc).

But at 25 and in a secure, cheap rental, there's probably no rush to buy right now but there are things you can do to make it easier when you are ready to.

Layinwait · 29/08/2023 08:42

EinyLinky · 29/08/2023 08:33

I'm almost 25, have a stable job, no plans to travel, not in a relationship, but have my pets 😂

It was assessed before I moved in, they said it's not suitable for rent and will be about 10k to fix the damp issue. Family member doesn't mind me staying here, says it benefits us both than him just selling right now (doesn't want to fix it). Had an awful tenant before who costed him a lot to evict, so think we are both happy 😂

and what’s your expenditure like? Socialise? Hobbies? Do you want to travel?

25 and single… seems young to me to not be leveraging low rent and enjoying being responsibility free?

what do you earn?

Layinwait · 29/08/2023 08:42

24 and single

FlyingSoap · 29/08/2023 08:45

Absolutely not at the minute. We rent from HA and it’s cheap, we would love something bigger but the rates are just stupid and we could only afford a very tiny (1/2 bed property) in a rough area so why would we move out of where we live? Too much cost, risk of negative equity. Love where we are now. It’s a lovely village with catchment for outstanding schools.

Renting isn’t necessarily worse, it’s all about circumstances

SleepingStandingUp · 29/08/2023 08:46

What's your rent Vs mortgage repayments op?

Personally I'd keep renting and saving hard. 5 years is a long time in your 20s and I wouldn't want to be tied down to a one bed house that needs expensive work doing. Even if you threw 10k into fixing it immediately I wouldn't want to be tied down by it.

GRex · 29/08/2023 08:48

It is not safe to live in a property with damp: https://www.nhs.uk/common-health-questions/lifestyle/can-damp-and-mould-affect-my-health/#:~:text=Yes%2C%20if%20you%20have%20damp,also%20affect%20the%20immune%20system. Whatever plan you make, it should include fixing the damp issue or.moving out. How can it be a one bed flat yet the owner has sole responsibility to fix it, usually property repairs are paid in shares by all the flats? How do you know it will cost £10k when price ranges can vary enormously when you send for quotes. Regardless, the issue will get worse and more expensive to fix, as well as damaging your health, the longer it is left. With such a small property and a big issue making it unliveable, there is a high chance of the surveyor marking it unsaleable, so the family member will need to sell to a cash buyer e.g. auction.

Can damp and mould affect my health?

Damp and mould can make you more likely to have respiratory infections, allergies and asthma. They can also affect your immune system.

https://www.nhs.uk/common-health-questions/lifestyle/can-damp-and-mould-affect-my-health#:~:text=Yes%2C%20if%20you%20have%20damp,also%20affect%20the%20immune%20system.

Original poster

EinyLinky · 29/08/2023 08:53

@Layinwait I travel within my holiday at work and that's perfect for me, I like the stability of a fixed job 😊 especially when I have a dog and 2 cats. They are my hobbies and my main way of socialising with others! (Mainly the dog).

I earn 35k

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TotalOverhaul · 29/08/2023 08:55

I'd stay renting but put aside all the money you save from it being a cheap rental into a deposit account. And in 5 years or so, I'd ask family if they'd like to sell to you, privately, at a fair market value, avoiding estate agent fees.

But more generally, it might depend right now. A family member came into some money and was planning to buy but DH advised them to stay for a year in their extortionate rental place because he said even though the rent is ridiculous, London flat prices are dropping so fast that the small amount of interest on the savings plus the price drop means they will be able to buy a nicer flat in a year's time than if they buy now. I can't quite see how this is the case, but he might be right. He comes from a family of accountants and is good with maths.

Original poster

EinyLinky · 29/08/2023 08:55

GRex · 29/08/2023 08:48

It is not safe to live in a property with damp: https://www.nhs.uk/common-health-questions/lifestyle/can-damp-and-mould-affect-my-health/#:~:text=Yes%2C%20if%20you%20have%20damp,also%20affect%20the%20immune%20system. Whatever plan you make, it should include fixing the damp issue or.moving out. How can it be a one bed flat yet the owner has sole responsibility to fix it, usually property repairs are paid in shares by all the flats? How do you know it will cost £10k when price ranges can vary enormously when you send for quotes. Regardless, the issue will get worse and more expensive to fix, as well as damaging your health, the longer it is left. With such a small property and a big issue making it unliveable, there is a high chance of the surveyor marking it unsaleable, so the family member will need to sell to a cash buyer e.g. auction.

Tbf, there's never any mold and I keep a dehumidifier running in every room. Damp isn't an issue in the flats above (both being rented out on the market) there's 2 above me. The walls on this flat are crumbling/flaking on the outside as well, but only for the bottom one... 🤔 don't know how that will long term effect the ones above, but they haven't had any issues

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Original poster

EinyLinky · 29/08/2023 08:56

Thank you for the advice!

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5foot5 · 29/08/2023 09:32

Dodgygeezer · 29/08/2023 07:48

In my experience mortgage companies require fundamental damp problems to be repaired before they'll release funds Usually this means the seller foots the bill as the property will take ages to sell otherwise

My first property was an old terraced house and required a damp course to be fitted. The mortgage lender (Nationwide) would not release all of the funds until the damp course was done and it had been reinspected. I paid for the work so I had to find money to fix the issue and to cover the amount withheld. That was quite a while ago (1985) but I wouldn't be surprised if there is similar now.

I also think you are doing the right thing to continue renting and save like Billy-o then get somewhere more suitable in a few years.

ActDottie · 29/08/2023 09:39

HerProposal · 29/08/2023 07:32

Much, much better to get on the ladder with whatever you can afford than to rent.

I disagree with this.

Your preference is a two bedroom place over a one bedroom. So it’s likely you’ll want to move pretty soon after buying a one bedroom anyway. Moving has costs of stamp duty, estate agent fees and legal fees etc. plus it has a cost on your mental health with the stress of a move.

Personally I’d wait until you can buy a two bedroom place and it sounds like you have good deal with your rental atm so I’d wait. It’s much better to buy somewhere you can see yourself long term so you can really make it home.

Twiglets1 · 29/08/2023 13:19

EinyLinky · 29/08/2023 08:36

Currently saving about 7k a year, I only have an easy access saver 😳 clearly need to jump on that government scheme one!

Yes you should. You can put 4k in this financial year (by 5th April 24) and then put in another 4k after April. By 2025 you will have 10k in there.

It's a better rate than you get anywhere else so makes sense if you are a FTB who is going to buy a property worth under 450k.

GRex · 29/08/2023 13:55

EinyLinky · 29/08/2023 08:55

Tbf, there's never any mold and I keep a dehumidifier running in every room. Damp isn't an issue in the flats above (both being rented out on the market) there's 2 above me. The walls on this flat are crumbling/flaking on the outside as well, but only for the bottom one... 🤔 don't know how that will long term effect the ones above, but they haven't had any issues

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Even if the issue does not yet directly affect the flats above, it is a freeholder issue, because building costs are shared. The freeholder, the managing agents for the flats, or all 3 owners together if its share of freehold, need to get quotes and resolve it. As you aren't the owner, that is for your family member to look into. If the costs are split then it may turn out much cheaper to resolve.