Spending £3,500 a month in rent

[sgroobles]

Having a slightly :O moment as we have just signed a rental agreement for two years for £3,500 a month in rent. This is in London so can't be that unusual based on the number of properties we saw at this rate.

We would prefer to buy somewhere but, honestly, with the way apartment prices have stagnated since about 2016, it's too big of a risk.

Feels pretty horrifying that somewhere to live can cost so much, but we also need to enjoy living somewhere as you do only live once... anyone else paying what seems a crazy amount in rent?

It is a shocking amount but obviously depends what you are getting for your money and if it is affordable for you.

Yes I know a family who pay £5k near Brighton. They like the freedom of renting and tend to move countries every few years.
If you think what most people spend on maintenance for their houses it’s not so bad. 20k + for a kitchen. 30+ for a roof.

I for my sins ,live on the same road as Katie Price, just outside Brighton. She pays 8K A MONTH allegedly. Ours is a bit more palatable but yes, nice places are expensive, I'm surprised this surprises you.

Why does flat property prices mean it's not worth the risk to buy? Surely you'd be better off even in a flat market as you're paying off equity? And you have the stability of knowing you won't be evicted.

Unless you only have a small deposit and think prices will drop enough to be in negative equity? Or are only planning on living there for a few years?

I'm only writing this comment because you say you'd rather buy, I promise! If you prefer renting for other reasons then that's great, but might be worth doing the sums if buying is something you want to do

I think you’re sensible to avoid buying a flat now. It’s a huge rent to pay but a choice you’ve made for good reasons no doubt.

Buying and moving is incredibly expensive for sure, but that rent is £42000 a year. For sure there are always reasons to rent not buy but if the calculation is financial it wouldn’t take long for that sort of loss to stack up badly against buying, surely?

@sgroobles

Which part of London are you moving to?

Putting 42,000 a year into equity that I could potentially release / build an asset in the future rather than into someone else’s bank account would seem more beneficial to me but I’m not a finance person.

At that rent OP’s flat is presumably worth about £1m. Stamp duty on that will be about £42k, so a year’s rent before other moving costs. Ground rent/service charge maybe another £2-5k pa.

On balance I would probably rent too, especially if you’re planning to move within five years or so.

Yes, rents are very high and if you want to live in a nicer desirable area even more. Enjoy your renting time. I would said you are wise not to buy in the current climate. However, people in the UK seem to mainly focus in paying the mortgage and pensions. Lovely when the economy is booming now with the outlook better to be ready to pack and go.

I hope you have a good break clause in your tenancy agreement - otherwise you may be liable for the whole 24 months rent regardless of any life events may occur in that time that make it difficult to pay / require you to move

Nice stealth boast there!!

Yep that gets you a property worth 1.5 ml in London.
Which if you bought with 1 million mortgage assuming 500k deposit is costing 3333 In interest on a 4% mortgage .
So you paying what you would pay in interest without maintenance costs

We just left london and had been paying £4200. Where we were, Balham, it was the norm. We left when the landlord tried to put up the rent. We’ve landed in surrey. We’re paying £2200 now and while I’ve only been out a week, my dh and I have had a lovely weekend out not worrying about how absolutely ridiculous rent is and instead have treated ourselves to a bakery bought picnic lunch and took the kids to bocketts farm (we had been packing peanut butter sandwiches and heading to the same common before).

I had to pay that for a while while getting some essential repairs done to my house. That got me a very small terrace house in London. It was an eye opener because it made me realise that if I had not bought my (also very small ) house just in time, there is no way I would be able to afford to live in London.

The norm for a London property 1m-1.5m. It’s extortionate though

You are wise. People who bought recently are paying that amount on interest alone for flats in West London. These are obviously falling in value amid the outflow of wealthy and their equity is now deep in red.

That is scary. Unfortunately not an issue very widely covered/understood by those outside of London.

Absolutely crazy money to hand over.

That’s a bit of a generalisation. It depends how much deposit they put down as to how much they are paying in interest so that will vary from person to person.

Lots of people buying flats in London are getting family help re big deposits.

And not every flat is falling in value, again that will vary depending on exact location & how desirable the flat is with regard to the things buyers want like good roads, good catchment areas, transport links etc.

It’s a hell of a lot of money but the market rate I guess. Houses - generally speaking - are a better investment than flats, could you consider buying one further out?

Is a two year tenancy agreement the norm now in London? I would feel very nervous about signing up for that with the economy the way it is now but as a PP says maybe there’s a break clause.

A lot depends on the quality of home and location. I imagine it’s a nice place in a desirable area and you’ve both got good incomes so it’s manageable. Horses for courses really.

1.5 million? That doesn’t sound right. Sounds too high a property value for the rent the OP is paying. Rents are sky high right now.

Where I live in inner London, in my building at present 2 bed flats sell for around £550-650k but rent for £2.5-3k/month.

There is no such thing as 2-bed flats selling for <1m in zone 1, except for ex councils.

That's roight. Us bumpkins 'ave no idea about that Lundin- we pays a guinea a week.