Long term Renting? What do you intend to do in the future?

[Mrspitt3]

I'm horrified at some of my friends that have been renting for 20+ years and are in their 40s, and most don't Paul into a pension. I'm mid 40s and got on the property ladder when I was 20 and had a partner (I know prices have changed and I was working didn't have uni fees etc, but had no help from parents). I'm curious to know how long term renters intend to keep a roof over their head when they can no longer work due to age??

I think there are three completely different scenarios here:

1. People who have chosen not to buy for whatever reason but it is real choice. 2. People who have no choice but to rent because they have no way of saving for a deposit but don't qualify for social housing. 3. People with decent secure social housing tenancies.

Talking about share portfolios and investments into 100s of thousands/ waiting for London prices to drop has very little relevance to people stuck in that second scenario or those in social housing.

The thread is about scenario 2 - about people stuck in shitty short term rentals, where the landlord can ramp up the rent each year at whim/ chuck you out with a month's notice and the prospect of people past retirement age being in this situation. I don't think the OP is being judgy personally but I guess that people in that situation don't like to think about it in truth. Snarky shite about acrylic nails hardly helps, each generation has wasted money in some ways fags being the more old fashioned one..... But of course they all worked hard didn't they?

And it's perfectly reasonable for people to observe and be concerned even if they are not in that situation everyone knows people who are.

The government are doing more about it now than has been done for many years. I think people should have more faith

Bubble.... I've paid a little (for a lot of years) into a private company pension, so I'm hoping I can cover house maintenance.

I don't have faith that the government cares about much at all apart from the votes that they get at the next general election and the short term.

Increasingly ..... I think you've hit the nail on the head!

Bubble .... my parents generation tend to have downsized from 3 bed family sized house to smaller 1 or two bed places in their late 60s and ensure they plan financially for the future so ensure their house or flat is in order for another 20 plus years.

Our current government maybe more on the side of the wealthy landlords 🤔

I rent as I can't buy in Australia - one) foreign investment in property is capped (although there are ways around this tbh) and two) my lawyer told me not to have any assets here (I will be splitting with DP as soon as our visa situation is resolved).

I pay 12% of my salary into a pension and I'm also entitled to a UK pension. I have enough savings for a deposit in the UK (offshore ).

My mum owns two properties, I may or may not inherit, depending on care home fees.

Rent in Australia is high, so if/when I return to the UK I would hope to get a mortgage and make significant over-payments for a similar amount, particularly after I stop paying school fees.

I'm not thrilled I'm renting at my age - I bought my first property at the age of 19, but by keeping my money/assets off-shore I'm protecting myself from DP and I think I have enough in place to protect myself when I'm older.

JC mentioned rent control in a recent speech, it's enough to make me vote Labour atm.

We rented until our mid thirties, and I've only just started a pension. Before purchasing our house I was resigned to long term renting, because we are low income and self employed. Before that I was low income, self employed, single and living in London: which meant buying in my twenties wasn't possible.

We were able to buy because we got offered a substantial gifted deposit from our families, we had a joint income, and were able to buy within the limits of what people will lend to us. It took us a year to get finances in order and a year to find somewhere and buy it. Yes, we made prudent decisions and worked hard to make the most of the opportunity but frankly it was privilege of having family able to offer that changed our situation.

I was quite aware of some of the challenges facing us in renting, but it wasn't like I could wave a magic wand and make lenders keen to loan to us (we had to use a broker) or change that £100/month is a sustainable rate of savings for us. If we didn't have emergency and sinking funds we could save more. It would have taken us 20 years to save a deposit, however.

I also think that people's point re liquidity and investment is worth bearing in mind. Not everyone believes in property as financial security, not everyone is able to secure property. We might have appeared to be drifting along happily while renting: the alternative was so far beyond our grasp it wasn't worth really worrying about. People's circumstances are different.

@the average wife

Rent controls are not the panacea they claim to be. In most cities with rent controls the result is that landlords
a. decide not to rent aany longer.
b. no longer invest in the properties they are renting out leading to antiquated bathrooms, kitchens etc and a general decline in the housing stock.
c. Get round the controls by letting the property furnished or by doing large scale renovations which means the tenant is evicted and the rent massively increased.

Seems to me that the only solution to the housing crisis is a large scale, government backed building programme which will shift the supply/demand balance. That will involve a relaxation of planning restrictions and major investment. And where does the money come from?

Our current government maybe more on the side of the wealthy landlords
Many MPs are also landlords or had invested in property
they have no interest in seeing prices go down to affordable levels because they will lose money

I see your point Fionn but as a renter for the last 7 years I can tell you landlords currently don't invest anything into their properties, and the availability of quality houses to rent is not existent. Due to this the greedy landlords are putting prices up constantly - and still not investing, knowing we have no choice.

A combination of rent and quality control, with actual rights for tenants would be good. Many of the landlords in our area are small time landlords, so not renting out their properties wouldn't be an option for them, leading to them selling - more houses on the market - lower prices - less deposit needed - possible house for us?

Reflex.... yes Im presuming that would be the case, it's not in the interest of those (minority) with the ability to change things for the majority.

I don’t understand these rental arguments, other than the having to move fast.

my second house I bought for 221k. I sold it 13 years later for 430 k. I also rented it out for five years at an average of 1300 a month as I lived elsewhere for work.

The average renter would have in that period spent 47k in rent.

The house I currently live in now I’ve been in for three years, it’s a much higher value. But Zoopla has the value currently increased by 130k since I bought it.

I don’t know what kind of investments people are doing that they are not just getting those kind of returns, but they are also Off setting the cost of renting. But if you want to post your tips here, I’m sure we would be all ears 😂

Bluntness....I agree it baffles me too and choosing to rent and invest sounds very risky

I would love to be in a position to buy but the older I become the less likely that will happen. A 3 bedroom in my area is 1400-2000 a month so once renters have paid that plus bills , for me there is nothing left to save and my family aren't in a position to help me with a deposit. It's infuriating as the amount I'm
Paying in rent I could be paying on a mortgage ! It is "horrifying" how much rent is, when I retire who knows !

I think the current government (surprisingly) has tried to make BTL less favourable, with the extra 3% stamp duty, and other measures. However, low interest rates still mean people see BTL as a good investment. I'm not sure it is now, as maintenance costs etc are expensive, but there'll be a lag before people realise this, perhaps.

Today 09:12 Mrspitt3

"Bubble.... I've paid a little (for a lot of years) into a private company pension, so I'm hoping I can cover house maintenance."

That doesn't really sound like it will be enough to fund those big expenditures? Isn't that pension for you to pay for your day to day living out of? I did say, taking into account £1k a month pension.... still not enough is it?

And agreed I know lots of people who expect to downsize to pay for their pension. It doesn't seem massively realistic tbh. When do you sell up? 60? 70? Say you sell up and get £250k equity. How long does that keep you going? 20 years maybe? You could easily live for 40 years. And there could well be 2 of you. I think people see houses worth £500k and think it's untold riches. In reality it's not much to buy a smaller house and fund your non working life in its entirety.

There is a lot more incentive/ funding to build affordable housing now than any point in the last 15 years or so. Not because the government care particularly, but because any government has no choice. This current situation is due to 50,60 years of neglecting housebuilding. They simply have to do something.

Just to respond to Bluntness100

I don't think I can link to data on here, but i've put urls at bottom linking to source data.

A 221k house bought in 1985 and sold in 2014 would now be worth 888.4k based on halifix price series.

Bit a 221k deposit invested in any UK equity tracker would return 1433 including dividends, so would be worth 3.2 million in 2014. If you include USA equity which must investment funds d, it would be even higher.

30 years rent at 5% yeild = 430k

so the house owner is down 2.7 million vs stocks in the same period.

There are lots of caveats here that you could rightly argue narrows the race, such as mortgage debt, tax on capital gains and dividends, etc. But I hope I've made the point that property is not the best performing asset class of past 30 years, even accounting for rent.

There is nothing hugely more risky or difficult about saving into stocks. It's more of a cultural bias towards property IMO.

www.thisismoney.co.uk/money/investing/article-2958803/Cash-stocks-property-best-returns-past-30-years.html

I think it’s absolute bull with this idea of controlled rents.

The yields are very low in high-cost areas (like London). The only reason to consider btl is the value of the property going up. However, there’s a very hefty Capital Gains tax to pay.

The current government is making it very difficult for landlords too. They’ve increased stamp duty so landlords pay + 3% of the value of the property more than owner-occupiers. In addition, the tax rules have change so if a landlord is a high earner with a high LTV, they could be making a loss and still get taxed!

I think the above measures have made a massive contribution to the current slump in the market and have made it more impossible for a lot of landlords to carry on.

As PP said, Property isn’t always a great investment. Personally, I’ve stopped buying extra properties because of the much heavier taxes imposed on landlords.

However, I think renters will get screwed the most if there aren’t many rental properties competing for occupancy. So be careful what you wish for.

Fewer rental properties just means more properties for would be owner occupiers

The number of homes available for people to live in remains the same, what changes is the proportion which are rented versus the proportion which are owner occupied
Landlords who can't make ends meet we'll have to sell cheap so that means that people who were forced to rent because of lack of properties available to buy will now get a chance to buy

Yay thank goodness greedy landlords are finally being forced out by government legislation👍

More families will be able to invest their wages into their own future's instead of funding the retirements of landlords 👍

Be careful what you wish for. Idiom. Common refrain by those with a vested interest in the status quo. See also: Patronising.

Personally, I’ve stopped buying extra properties

Must be tough to stop buying extra properties. As a renter, this will be hard on me too. Because I hope to stay a renter forever, see. If people aren't buying up extra properties for investment purposes, where on earth will I live?