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!

That's it though, never going to happen. Same with the social housing near where I live. Beautiful houses but wouldn't ever be in with a chance of owning one. They are lovely big properties.

There’s a group of people who seem to think that if they just hang on they will beat the market, there’s a big crash coming and all the idiots who bought high will be forced to sell cheap and they’ll get a bargain.

unfortunately they have existed for some time and are still waiting for their moment. Broadly when they post on here or other sites they are very much “we know better than you, just you wait”

buy a house, buy it to live in, live in it. Prices go up and down but the security of ownership doesn’t go away. It’s a home not necessarily an investment

Well yes, because they are rich. Also likely to be fairly short term renters.

I have rented places for work because I knew I’d only be there for a finite time.

If I planned to stay put for a substantial period I’d buy. I wouldn’t pay someone else’s mortgage.

London property has definitely slowed down particularly flats. Historically so much of the market was driven by equity which has been harder for newer entrants to build. Add in wage stagnation, frozen tax bands it's not a great picture. The main issue is our ageing population, the government will want more of us to save more into pensions.

Anyone choosing and planning to privately rent in the UK for the rest of their lives, when they could easily buy, is very foolish. Especially if they have children. Rents are only going to fry higher than higher, and even with the forthcoming RRB, you still have to live with the insecurity that the homeowner can kick you out for one of many reasons. Obviously it’s a different ball game in social housing.

It is fair to advice if it comes naturally in conversation when someone is wondering about it. If you are commenting on someone's "looking to rent" post, you're not trying to help. The example about expensive flat is something I witnessed a few years ago. My brother bought a flat in a building that everyone knows is expensive. He said in a group and the first response from someone was "but you'd get a house with more bedrooms in [few towns over]". Similar thing happens when people buy a house from the smaller cheaper towns around our big city, they have an urge to justify why that place is so much better than the major city where they used to rent. Interesting phenomenon.

I think its a given that these discussions and conversations dont apply to those with assured tenancies, its people in the private rental market that this is about.

No one in their right mind would give up a HA or social housing rental, its for life, its cheap and UC housing element covers it all if you find yourself out of work. Its a no brainer.

@WhereIsMyLight the future looks so depressing

Easy to say that if you are a council tenant on low rent and everything covered for you, those people are indeed laughing. I am wondering however all those that are paying sky high rents are going to be able to afford it once they retire. So no asset and still having to pay rent. They’ve been going on about pensions today, this must be forming part of their thinking in making people work longer. Many don’t have pension savings or an asset in the form of a house.

Not fully true, sure 3million pound flats have lost value but lots of London still remains a good buy.
I just recently sold adamant made 250k on a flat I owned for 6 years. It enabled me to buy a nicer home than I could have afforded purely through savings.
“smart people rent” is so one dimensional.

It depends on lifestyle and family too, if I was 25 and wanted to move all the time renting would be fine, but being 35 and having kids means I want security that renting just never offers.

I am wondering however all those that are paying sky high rents are going to be able to afford it once they retire

The OP has invested her deposit

I hope so then my daughters stand a chance of owning and having security

I’m with you, if you have a good deal on rent it’s vastly cheaper than paying a mortgage in zone 1-2. London has a low yield and you are better off investing the money you would put towards a mortgage.
Reasons to buy are security, renovations etc.

Its foolish to privately rent long term if you have the opportunity to buy a property, aside from very few select circumstances. Thats the reality, i dont know anyone who rents when they have the opportunity to buy, save for those in social housing (which makes sense).

My relative has just bought thier first property … Zone 1, £750k (yikes). However, mortgage is comparable to rent, she’s not planning on selling it or moving so any crash won’t matter - if she sells in 30 years time it will be worth more that it is now.

We are in the North .. mortgage paid off by 50, so don’t need to worry about that. DD has some additional needs, so makes me feel comfortable that she’ll always have a home (this one, as she’ll get it after we kark it)

Thing is that has to be a heck of a lot of money to generate an income that’s enough to cover rent. Granted my area is expensive (Home Counties commuter town) but rent here for a 3 bed family home is at least £2,500 per month. You’d need a significant amount of cash invested somewhere to get that amount each month to pay your rent!

Anyone I know who has ever said someone should buy instead of renting was not advising someone who lives in London. Or Cambridge/Bath/Oxford. Surely everyone knows how enormous a deposit you'd need?

You can buy in my SW town for £200k with a 5% deposit.

I bought a house at 51. My biggest fear was getting to retirement age and having to live in a HMO.
Thank goodness I did. The house I paid 800 pm for was remarketed at 1400pm. I wouldn't be able to afford that now, let alone when I retire.

Because people have been brainwashed into thinking house prices can only go up.

Play buzzword bingo with one of the following phrases :

i) Renting is dead money.

ii) You can't go wrong with bricks and mortar.

iii) They're not building any more land.

iv) In the long term house prices only go up.

There's a world of difference between a house and a home. However good your financials, renting will never bring the peace of permanence. Yes, there's peace in knowing that your landlord will have to deal with repairs, but that's nothing compared to the peace of knowing that nobody can take away your home (as long as you make any mortgage payments).

You don't know that peace and stability until you experience it.

Otherwise, no it's not always better financially to buy than rent, especially in London. Other assets can do more for you. That might be more appealing for you, it's not a blanket rule. But personally, I've cut my cloth so that I have both the peace and stability of a house I can call a home AND making leftover deposit work better for me than a bigger house would have (also didn't want to put too many eggs in the same basket).

But if you can't afford rent when you are retired then you will get housing benefits or whatever it is hese days.

Not really a great reason to rent is it though….
cant afford it that’s ok, we know know the country will hand it over for free.

Not London but where i live even though house prices are at an all time high, it is till cheaper to buy than to rent. My ds is about to buy his first property, his mortgage will be about 1,500 pm, to rent the same property would be 2,500pm.

@soupyspoon @ForLovingAquaSheep @Ilovelifeverymuch

You're confusing interest any repayment.

My post specifically refers to interest on a mortgage comparable to rent. Which they are. This is about "wasted" money.

e.g. if you get an interest only mortgage over 25 years, then after 25 years you need to either pay off the amount you borrowed, or sell the house to cover the debt.

As house prices generally rise, then you will end up selling with the mortgage paid off and a lump sum, but then probably unable to buy another house and will have to rent (depending on age and ability to get another mortgage).

Most people sensibly take a repayment mortgage, which means the interest bit is your equivalent to rent, then the rest is repayment of the loan, so that after 25 years the property is yours.

So what happens when you retire and still need to find rent at extortionate prices in London. Hope you have a good pension