Why do people prefer to rent rather than buying a house?

[Cocktailglass]

Genuine question, AIBU to not get that in the long run you pay off mortgage, own your home to pass on to your DC and rent, especially with the high rates now, is dead money?

I do of course understand getting a mortgage is harder now and house prices, I'm talking about people who have been renting all their lives.

Unless having rent paid for on benefits, I don't get why anyone working hasn't got on the property ladder, less to pay every month with a long term mortgage, eventually nothing to pay unlike rent.

As I said, not talking about now, but decades ago. You showed your earnings, were offered the best deal of what you could borrow, bought your first home within these means, a starter home with the intention of paying far less for payments than rent, property goes up in value, you buy your next home without too much of an increase, still less than renting. So the upgrading continues and initially you just get what you can afford to get on the ladder.

Renting does give you the benefit of any problems being the responsibility of the landlord but all depends on how good they are! With council properties in a much better position as houses are upgraded and issues dealt with (hopefully) more quickly.

Plainly speaking, you work, give a significant part of your income to someone else just to live in their house, pay bills and CT. What's the benefit of this rather than knowing you're paying straight into a loan for your own property, a financial asset, it's yours? Xxx

Many people with large houses don't need to release equity to fund their retirement and if you're planning to pass the property to a family member, downsizing's not a consideration. We certainly won't be downsizing. I'm not against renting and have done so in several countries we've lived in over the years but the more I think about it, the more the economics just don't stack up.

Trouble is that many people need to live in a handful of big cities because that's where their jobs are. Not many jobs for actuaries in Western Lake District! Every single one of my son's Uni flat mates has had to move to London for work - they all tried to get more local jobs either close to their family homes or close to their Uni city, but the only jobs available/offered were London. Luckily, some of them have been able to flat share together so they can just about to live there. None are even thinking they'll ever buy in London so are expecting to rent for many years to come, but then again, half of them are planning to emigrate once qualified/established in their respective professions!

The lack of quality jobs in the regions is a massive problem and getting worse. Not only does it cause the "brain drain" to London and a handful of other big cities, it means far less "discretionary money" being spent in those regions just making the deprivation worse, more local firms closing, shops closing, etc.

But if you own your property, any savings you have will be exhausted by having to shell out 10s of 1000s of pounds on property repairs and maintenance. New roof, windows, kitchen, bathroom, heating system, etc etc... In this day and age you're no better off financially owning your property (in retirement, or any other time really,) than you are renting. Because even when it's paid for (when most people will be in their 50s and 60s,) you still have to fork out loads for maintenance and repairs. (It's even worse when it's not paid for, as you have your monthly mortgage payment as well as having the maintenance costs...)

A woman I know (aged 67) had her house paid for 8 years ago (her and her DH) and they have spent £40,000 on it in the past 6-7 years. New roof, new kitchen, new windows, and a new set of electrics. All needed, not just spending the money for shits and giggles. It's an average sized 3 bed detached. And if either she or her DH become ill/need care, the house could be/will be sold for their care. I know a number of others who have had the same scenario. (Including one couple who have just had to fork out £25,000 on underpinning, as their house foundations are slipping.)

And I know a number of people who are still paying for their house, and have had to go into debt to fund essential maintenance on their home. Then (as a few people have mentioned,) we have people in flats who are having issues that are costing them 5 figure sums, and making their flats impossible to sell.

Seriously, the people who are best off are people in social housing. Tenancy for life, affordable rent (often a third of what private let is,) and repairs and maintenance done for life. And if you can't afford the rent at any point, you get it paid.

I don't know where you get the idea from that so much money is being spent on property repairs and maintenance. I've never owned a house like that. All of the houses we've owned in the UK have increased hugely in value over the years and we've always made a significant profit when we've sold them. With today's housing market, it's obviously much harder to make those kinds of gains but prices are still increases in many parts of the country.

I'm not against renting as I've said on a previous post but I consider social housing tenants to be the worst off of the three groups for all kinds of reasons.

Saftey net, if a single parent loses their job the state will step in to pay rent, they won’t step in and pay mortgage payments which risk’s homelessness.

Yes Im wondering where all these houses are that need constant maintenance.

We did put a new kitchen and bathroom in, plus we put a conservatory on. These were not necessary but thats personal taste and choice, we could have lived with what we had, they were perfectly functional and pleasant to look at.

We had the loft boarded, to make that easier for us. We're now getting someone in to do decorating and flooring because we did it ourselves years ago but we're too old for that now, but again, personal choice. A landlord certainly wouldnt see that it needed upgrading or changing. We had a wood burner installed, not sure any landlord would do that anyway. We're getting a new door, OH doesnt see the need but Ive always hated it.

This reminds me of my friend’s ex who was perplexed as to why people chose to fly economy instead of business class for long haul flights.

I’d love to but instead of paying extortionate rent each month but I can’t get a mortgage despite it probably being cheaper than what I am paying rent each month. Bloody ridiculous.

Maybe not short term, but if you watch the house renovation/auction TV programs, you see the state that houses get into over several decades when there's been minimal maintenance. You can't really live in a house for, say, 40-50 years without having to replace windows & doors, roof, heating/electrical systems, rewiring, kitchens and bathrooms, etc. If you don't replace the infrastructure, they lose value quickly and end up having to be sold as a renovation project, or maybe auction if bad enough.

I actually prefer to rent
I’ve got a beautiful cottage by the sea, the rent is super cheap for the area as its social housing. I don’t have to worry about repairs. If I get ill and can’t work or lose my income, I won’t lose my house, because unlike a mortgage, benefits will ensure I don’t lose my home. It’s a secure tenancy, I can decorate how I like. I can add things like wood burners, conservatory etc with permission
I don’t want the insecurity of paying a massive mortgage to stay living where I do. I’d like to leave my kids something but there’s no guarantee I won’t need care and if I had a house, sell it after breaking my back to keep it all these years. No thanks.

I really, really wish everyone could have that 🙂I am happy for you (genuinely).

Well yes but over 40-50 years if you were to stay in the same property, the value of that far outstrips the cost youve spent on maintaining it. For half of that (at least if you're lucky) you wont have any mortgage costs any more.

But unless you buy a new build or a newly renovated property, the 40-50 years is already ticking for the period of deterioration before you bought it when it was owned by other people. Say, buy a house only 25 years old, and you've not got 40-50 years of "free" maintenance, you're going to start needing to do things straight away. And it's not an "all or nothing" at the 40-50 year point - things deteriorate over different time periods, some materials deteriorate faster than others so a roof may last 50 years on one street but only 25 years on another street if different materials were used when they were built (i.e. different developers).

Also add in regulatory/law matters such as changing standards for things like electrical distribution boards, insulation, energy efficiency ratings and you can see values compromised if such works show up as being required as part of the buyer's survey.

Yes, we bought our house 16 years ago, its just coming up to 100 years old now. Some new electrics we want now, will require some upgrades but I wouldnt bother if we werent doing the bit of work we're doing

We're long enough in the tooth and bought enough properties to know that unless something is really dangerous, it doesnt have to be constantly changed with each new regulatory upgrade, you change that as and when you need it yourself. If a buyer doesnt want to buy it because the electrics meet the legal requirement from when they were last changed, lets say 10 years ago, well so be it

We nearly bought a property which had a loft conversion which met the regulations it needed to at the time, but not for now. We didnt move in the end but we would have bought that property.

No one on this street has had a new roof since we've been here, they all look original like ours, im not sure new roofs are common.

Thank you- I’m incredibly lucky and grateful.
i think affordable and secure housing should be the bare minimum for every working adult in this country and I too wish everyone was as lucky as me

I bought a small place 9 years ago. Saved up for years for the deposit. I love it, I love the feeling of having a place to live that feels secure. However, I am still waiting for mortgage payments to be cheaper than rent!

I don't have kids. I did buy my council flat but the area was demolished and it had to be sold and what I got wasn't enough to buy another one. I'm actually not sure that it was all that easy to buy even decades ago. A lot of people were in poorly paid insecure work back then. Some people also don't do well out of buying. There are people who have had to start again after divorce or other relationship breakdowns

My brother works full time and was only able to buy his flat two years ago by moving back in with my mum for 18 months to be able to put down a decent deposit - and we live in an area where house prices aren't too expensive

I don't think that was the point! This young man rents a city-centre flat that facilitates his lifestyle, no strings.

A house isn't an investment if you live in it. People commonly work around this stumbling block by thinking of it as an investment for their children - valid, as long as you don't have many DC.

But the PP's son isn't going to have kids. He will require a home to suit his lifestyle as it changes: a need better met by the flexibility of renting.

Most people move up the property ladder by investing in property. The gain funds the move to a larger, more expensive house. If you're smart, making relatively cheap improvements (that many home owners can do themselves) increases the value greatly.

Historically, yes, but I don't think we're seeing significant house price increases anymore and in some areas, average house prices are starting to fall. I really don't think many people expect the rate of increase of the 90s' and 00s to be the norm over the next decade or so.

I agree and I mentioned similar in a previous post. I do think there's still an opportunity to add value relatively cheaply to the right property though.

Most 10-15 year periods have seen an increase. They dont have to be dramatic increases for there to be value in your home which is offset by the possible up front financial outlay.

Average prices are starting to fall in some places, where in others the rate of increase is falling

People will often conflate and mix up the two different things

In 5 years time the picture would be different again probably. I think anyone who buys a a house as an 'investment' per se is rather foolish. Its a roof over your head which is hoped to be paid off in 20-30 years by the time you retire hopefully.

Over the last 20 years, a FTSE 100 tracker fund, assuming dividend reinvestment, has generated a total return of approximately 176% to 241%.

UK property prices have experienced an average increase of approximately 74% over the last 20 years, rising from roughly £113,900 to over £268,000. This long-term growth has been heavily influenced by London, which saw average prices increase by over 119%, while the North East recorded lower growth of around 39%.

This isn't a straightforward comparison - your FTSE investor still has rent to pay, your homeowner has upkeep costs, and I haven't calculated for an investor making an initial deposit followed by 240 monthly payments.

It's far from a slam dunk in favour of property, though.

But the house buyer has mortgage interest to pay which could be very similar to the rent they'd otherwise pay. Especially in the early years of a mortgage, the capital element of repayments is usually a very small proportion of the total repayments.

True. Although you put that money in a bona fide investment, whereas for most of us your house is your home, its not an investment.

And (not knowing anything about trackers/funds/shares what nots) I suppose you have to hope you put your money in the right investment?