Why don’t people understand that not everyone wants to buy a house?

[tarrantulla]

We rent a flat in London. Have a big deposit but would rather invest it across several asset classes. Prices around us in zone 1-2 are dropping.

People will often say things like “oh are you saving for a deposit” or “it’s such a waste of money to rent” when in reality, for the last few years smart people in London rent and not buy!

People say its a waste of money because it IS a waste of money.

You're still paying a mortgage. It's just someone else's mortgage. Someone who could kick you out with a few months notice.

This is only sensible if you’ve got a very secure rental such as a council
tenancy and know for sure you will never be asked to move

and if you have an absolutely massive pension pot

and if you’ve truly identified “several different asset classes” that will appreciate as much as london property with as minimal risk

There would have to be some catastrophic global event for prices in the capital to crash as prices in most major capitals are equally astronomical

surely you don’t base your financial planning on possible global catastrophic events. If there was one, all investments would be screwed so you’d still be better off owning bricks and mortar than a then no. Existent share capital

Zone 1, even worse, 25% down. That is a crash surely? I dont know the definition of a crash

https://www.rightmove.co.uk/house-prices/zone-1-93817.html

Because most people know how precarious it is to rely on the whims of landlords.

It is often cheaper as well to pay a mortgage rather than the ridiculously high rents we have in this country.

I can understand people who are tenants of councils and housing associations not needing to buy because their tenancies are secure but private renting is not really a good option long term in this country. Too much greed and too many dodgy landlords.

Yes I think generally speaking, a 5 or 10 year period tends not to show a drop, or stagnant. I think there have been periods or locations in the UK where thats not the case but overall it generally is.

I don't really understand this. Rent is MORE expensive than a mortgage for the London house I bought last year (with high mortgage interest rates and a small deposit).

Also before I reach retirement age I'll have paid it off and be able to live here for free.

A renter in my part of London would be paying more NOW to live in this exact house and more at retirement age when I'll be paying nothing.

How does it make more sense to rent? You need to live somewhere. Your investments would have to be giving a massive return in order to guarantee your rent for the entire of old age when you're no longer working. Also rent will likely be way higher by that point...

I'm genuinely curious how it works out cheaper long term for you to rent @tarrantulla can you explain? (Not being goody, genuinely curious)

I will buy some day and I am saving for a deposit. However, I like renting. I wouldn't be able to buy my current flat. I would either have to get a significantly older and smaller place or move out of the city center. For now, I want to live in the city. Once I'm ready to move to a quieter area, I'll buy.

So for zone 3, 11% down on last year, 10% on the peak of 2022

Cant seem to find easy stats for the other zones

On the other hand, over the last 10 years, on average over that period, prices in zones 1 and 2 have risen by 8% a year, year on year, that takes into account the drops as well so the rises in other years are astronomical it would seem

You have to look at things over the long term really

I understand, but obviously you got great salaries and self faith you are always going to be employed so rent money is just a small portion of your income.

I work part time nmw and am glad my accommodation is 50 percent and over paid, humble as it is.

We cut our cloth accordingly. As long each and every human isn't homeless, that's good

Depends on your spending / saving / timeframes really. If you just want to enjoy the lifestyle for a few years, renting makes sense.

Whatever happens you need £X to keep a roof over your head. If you own the flat, you are accruing equity in a property - if you rent, you aren’t.

So while you can invest your capital elsewhere for better returns - the value of that capital suddenly becomes quite important in terms of the possible return you get. Not spending £3k a month on a mortgage doesn’t leave you with £3k a month to invest - because you’re still renting… probably at £3k a month.

I appreciate not fancying buying a leasehold flat, high service charge, potentially difficult to sell on etc. You don’t get a lot for your money in zone one…

Property always makes money in the long term regardless of short term fluctuations. Renting is always dead money.

I wouldn’t want to be subject to landlords (and I am one). I bought my first property at just turned 23. No regrets.

First and foremost your home should be a place of security, not purely an investment. It doesn’t really matter what happens to the value short term. A few % here or there means nothing. But over 20 or 30 years they always increase.

Not they are not the same, at the end of say 25 years renting you will not own the house and still have to pay even more expensive rent compared to a mortgage where at the end of 25 years (assuming that the term) you own the house and don't have to make any rent or mortgage payments.

This means at retirement age when you slow down or stop working resulting in lower income your expenses are also lower because you don't have a mortgage or rent to pay.

What OP is suggesting works if the funds are invested for the 25 years but in reality life happens and part of not all of the money will be spent on one thing or the other and there is no guarantee that the investments will grow as fast and consistently as planned

The market is falling so it's a really bad time to buy anyway. I'm currently looking, more for practical reasons but nothing is taking my fancy, for how expensive houses are I want to be wowed and I'm often left just sort of shrugging it off. I have a house.mortgage paid off which I would also keep as well, so I suppose I'm not having my hand forced but I just wish there was something worth getting excited about. For the money, I want to absolutely love it. Struggling to find anything at all like that. I keep seeing houses overseas that are beautiful for a fraction of the price.

Eventhough I earlier said that I'll buy one day and buying might be sensible etc. I do have to say that the comments are annoying as is the superiority of owners. Just today a friend had posted on Facebook about looking for a flat to rent and there were people commenting "why arent you buying?" And "no need to waste money on rent if you just buy" and "with that money you could pay your own mortgage". Just so unnecessary.

Once you become an owner then becomes a pecking order depending what type of house you own. Flat owners are at the bottom and they're questioned about when they will buy a house. If you buy an expensive flat then the comments start again "with that money you could have bought a 5 bed house in the middle of nowhere". It is never good enough.

OP sorry for the hijack but did you used to be ‘tarantula’ on here many years ago?

I have never seen a superiority like this. And people advising on buying being better arent saying that because they think they're better, its just basic economic preference and sense, generally speaking (of course there are caveats).

There's no incentive to buying a house anymore. If you are a council tenant, you get all repairs covered for you, no need to buy a new roof etc.

Because it will go back up

My daughter was lucky enough to get a little housing association house with a garden. She loves it, she is not in a very well paid job but can afford the rent. For her it is her safe place. She suffers from anxiety and she has peace of mind in knowing that if there are ever any problems with her house, the HA will sort them for her. For her owning her own home would give her anxiety. Home ownership is not for everyone.

If you've done your sums then YANBU. People naturally invest in property because it's fairly low risk and anyone can do it. And you need somewhere to live so it makes sense, but I absolutely agree that if you know what you're doing your money can work better for you elsewhere.

Where do you live where you can simply decide you want a council house and pick up the keys?

It's a UK thing for whatever reason but plenty of very rich people rent

There are times when renting is absolutely preferable. Early in your career and open to moving to where the jobs are, definitely. Short term job opportunities, definitely. Moving to a new area and not sure of the area, again great. If you have a secure tenancy such as housing association, or are a student.

There are also other countries where home ownership isn’t that big of a deal. Mostly because these countries have legislation protecting renters, decent healthcare and generally a good social state. Which is completely different to the UK.

Many people in the UK are very risk adverse to renting in the long term. We have a healthcare system that is buckling, education system on its knees. We have a huge welfare bill that we cannot afford, a large proportion of which is the state pension. We have a lack of private and social housing. We have had successive governments that haven’t prioritised house building, promoted the UK housing market as an investment source for foreign investors and turned a blind eye to developers. As such, we have leaky housing stock, not enough houses and we’re paying a fortune for these houses. Landlords have got Buy to Let mortgages and still feel they need a profit after the mortgage and interest on that property are paid. We have generations of people who have not invested enough into private pensions. So for most of the UK, home ownership takes out long term uncertainty around their future and how they will be housed into their retirement. Most people work towards paying a mortgage off before retirement so their pension does not have to go to their housing costs.

If homeownership isn’t for you, that’s your decision but there are a number of reasons why people in the UK do want to own their own home and it is a goal they actively work towards.

It makes more sense to buy because when you reach retirement the house will be paid off and no mortgage to pay where as when renting you’ll still be paying that till you die. I know that’s the obvious reason and people will already know that. If you’re investing money now to buy later in life outright I do see the point in that but I don’t see the benefit of renting forever