Is it better to rent or to buy your own home?

[MerryXmasMrsHenry]

DH and I have been discussing whether to go back onto the property market while we still have a deposit or to just go all Continental and rent long-term instead.

We've only been renting for 6 months and would love your opinions on the pros and cons of renting and buying.

TIA!

'Could you consider moving from scotland?It sounds an even worse system than here'
Then we'd have no jobs.

So no.

Wouldn't want to be unemployed in this economy.

I feel so sorry for people made redundant and unable to find any work.

And in most councils you can't just show up and get housed. You have to have a connection to the area where you're moving - family, a job waiting for you, or been resident 6 months out of the past 2 years.

Otherwise, everyone would move to Devon and demand housed.

Your situation does sound really tough expat. Do have a look at www.homeswapper.co.uk - you might even find someone in Devon who wants to swap with you . Isn't it worth taking the risk of having to find new jobs to get your housing sorted?

But yeah, we'd buy in a heartbeat if we could.

IMO it beats renting for the security of it alone.

'Isn't it worth taking the risk of having to find new jobs to get your housing sorted?'

No, not when you can private rent and just keep doing that, however insecure.

Because we're both low-skilled and work that's reasonably flexible is hard to come by.

Plus, when you're talking about swapping council/HA places, you could end up in something even worse.

I guess you're lucky then to have the private rent option. It would be a big financial stretch for us (doubling our rent) and I couldn't live with the insecurity.

At least with a swap you can go and visit the flat/area/neighbours before you move, and you don't have to accept it if you don't like it.

A lot of people (and a few on this thread) fall for the financial fallacy of looking at their mortgage based on the price they paid 10 - 15 years ago and say 'my mortgage is cheaper than rents'. Yes it is cheaper to have a mortgege based on the historic cost of your house but if you worked out what a 100% interest ony mortgage on the current value of your house today is plus insurance and repairs then rent would be cheaper. People forget to put an opportunity cost on the equity they have tied up in their house - that really is dead money.

For example, I went to view a property last week to buy. A nice Georgian house on a square but very run down. Went inside and it was utter squalor. It was clear the old person who lived there should have sold years ago as he could not afford the upkeep and repairs.

No doubt he had no mortgage and no doubt it would have cost him more money to rent but he was living is squalor and had no quality of life. I see a lot of older people living like that. It is at that stage in life they suddenly realise owning a house is a very costly business and all their wealth is tied up in a house that earns them no cash income. In fact with repair and insurance costs it becomes a big cash drain every month. My elderly neighbours on both sides are in exactly this position.

it's just one of those things about the UK.

life's a trade off.

and part of that trade off of living in the UK is that if you can't afford to buy usually your only option is the insecurity of private lets.

but you have other good points, like NHS and tax credits and whatnot.

hey ho. that's how it works out.

i understand your parents are hoarding money to ensure they are comfortable in their old age, and can afford unexpected expenses.

But I also remember your parents offering significant 'bribe' money if you/the family would move to America. Why is their money only available to help when you do things their way? Especially when you/the family are struggling so much, and are possibly in a dangerous/unhealthy situation?

I give you credit for not being resentful toward them.

Expat, is it possible to move within the County? (you're in A&B right?)

I know I moan about where I live, but it seems I have it loads better. There's always houses up for rent on my estate (private rented, though it's a navy estate and some of it is HA now), and HA will have brand new houses soon as they are knocking the old school down.
We have a brand new secondary school, and the primaries are good, plus direct trains to Glasgow every half an hour, shops you need, Supermarkets deliver.

Always hotel jobs going too if you have transport and can work shifts.

'It would be a big financial stretch for us (doubling our rent) and I couldn't live with the insecurity.'

It will cripple us.

We're brassic and working poor.

But it's insecurity or drug dealers.

We visited this place before we took it and it seemed allright, so I don't trust swapping, tbh, not that there's anything to swap round here, anyhow.

if it were a sure thing we'd be willing to move, muggle.

just doesnt' seem to be much to rent if you're not going private and council/HA needs connections to shift you, not just 'there's a junkie under us who gets visits from glasgow gangs at 3AM.'

we do have transport! and we have retail/hotel experience (food hygeine certs, DH has minbus license).

'Why is their money only available to help when you do things their way? '

because it's their money, i guess.

my mom says it's because the dollar is so down against the pound and property is too expensive here.

but she never loses an opportunity to try to badger me into moving to a place i despised for as long as i can remember and left over 20 years ago. or to tell me ad nauseum that my kids will never stay here long-term, they'll move to teh US, or that my husband will want to move the second he sets foot there (but he can't without me, so even if he wanted to, it'd be too bad because i'm not going).

they paid off debts i had there. to use as a tool to try to get me to move there.

yah, right! with no jobs or skills, no car, no license, no insurance and three young children.

she just doesn't seem to get it and never will, so i've just moved on.

whatever.

we'll dodge along here and c'est la vie.

Ah that's a shame with the connections.
I didn't know if that just counted if it was out of the County.

Would private renting be an option to get your foot in the door here so to speak?

I rent through a letting agent now, though I've been in this house for 8 years and my landlord has no intention to sell, he owns numbers 1-7 in my street.

The best time to get a Hotel job is the beginning of the summer season obv, but there's often jobs going outwith that.
Some as far as Arrochar and Tarbet, but some nearer. Lots on Loch Lomond.
I've looked at them myself but don't drive and can't do shifts.

Oh, another thing, loads of Childminders here, and Nurseries.

we'll go visit them once a year because they are getting old and ill.

my sister is even worse!

she is in a position of extreme financial advantage due to her husband's collossal inheritance.

she teaches, so has time off.

and her children are teens.

but she refuses to come here because, well, you know how some think there.

anyhow, she got this insane idea that i'd send my kids to stay with her over summer (because everyone knows the only reason they don't live here isn't because they don't want to, who would ever want to live in Scotland!?, but because i prevent them out of spite).

she has a massive swimming pool in her backyard.

yeah, i'm really going to send my 6, 4 and 1 year old to live with you!

like i'd ever farm my kids out unless i had to!

she drives me round the twist.

It is impossibly hard when families have all sorts of opinions about what you should be doing. It is also incredibly hard when they are in a position to help out, but choose not to.

I had a similar situation a long time ago with my Grandpa. He indicated he'd loan me money for a deposit on a flat, and then backed out because he thought the completely-average-nothing-special flat was too expensive.

What drove me 'round the bend was that he was very wealthy and would never have missed the deposit money - yet, it would have made a huge difference in my life.

Don't understand the 'we'll help you, but only with serious strings attached' mentality.

Expat, I'm so sorry.

My first house cost £40k in 1984. Houses on that road now cost £250k. My salary then was £6250. The equivalent salary in that job is now £37k. Taxes were higher then and around taht time we were paying 12% interest. But because we bought we could work our way up and made quite a bit on later houses. But that was because I picked a career with income increases. Plenty of people choose jobs where you earn at 18 what you'll earn at 65.

erm - rent is for life, a mortgage is for 25 years (or whatever period)

rent goes up - generally your mortgage gets easier to manage with time as the amount of equity you possess increases and better deals are made available to you (so long as you can survive the short term ups and downs in interest rates).

even if a mortgage is more expensive, it still makes a whole bunch of sense in the long term. I don't want to pay rent when i am retired.

even though my house has remained static in value - it is so much better having the security of ownership, being able to alter it to suit our needs, and we now have three (3!) whole years of equity....(can't believe it...)

in the long term, property will increase in value, regardless of the shorter term wibbles. supply vs demand pretty much guarantees that....

when you pay rent, you pay someone elses mortgage........

Yes Xenia, my brother did.
(he works for Earsnt and Young, started off at 22 with Arthur Andersen)

Doesn't stop him being a collosal twat though.

Who remembered tomorrow would have been my parent's silver wedding. Was it him, or was it his sister, the cleaner in her rented home?

Xenia - did you consciously (and at a relatively young age) choose a job with income increases, or were you simply fortunate it worked out that way?

You mention it here with regularity, so no doubt that is what you advise your dc. Did you have someone advising you to think along those lines?

And obv I don't work for Earnst and Young because I can't even spell it!

oh, and ABetaDad, of all the financial investments my parents made (think equitable life pension...) buying their own home has proved the wisest, and easiest to convert to spending money now....

my pension lost 80% of its value last year too.

Yes, in hindsight and especially for people that bought houses in the early 1970s just before inflation took off, their house has beaten all other investments.

Problem is that house prices cannot keep going up faster than wages. Average house prices are still 5 x average wage and historically were around 3 x. Now wages are beginning to fall for a lot of people their mortgage will become a millstone. House prices wil revert to 3 x wages but at wage levels that are lot lower than now. That could mean house prices have to halve. Look at what happened in certain parts of the USA. Houses will not always be the best investment. It is an anomally of the last 10 - 20 years. Good luck to people who have made money though. I do not have a problem with that.

Older people who are selling now are still demanding top prices from young people who will never have the earning power to actually pay off their mortgage. The entire housing market has been a pyramid scheme from the early 1970s. Problem is with all pyramid schemes - it requires new money to come in at the bottom. Once that stops the pyramid collapses.

erm..but the demand for housing is ever increasing. more people live alone, thus creating more households - housing is built very slowly due to the constraints of planning, building regs and the vast inital cost required to get anything done before there is anything near a building to sell. demand vastly outstrips supply, and this generally can only mean that prices will go up.

affordability models relying on the 3 average income dynamic when still many reputable lenders lend at 4.5 1st plus 50% second income are hardly going to be accurate, are they?

i think what we will see is that you will need a vastly over average income to buy a below average house, or inherit lots of cash....(which is in a way, already the status quo in some areas)

I don't think there was a golden period and now it's bad at all. I bought in 1984 as I said above and was paying 12% interest around that time - I know because I had to write a comparison with 25 years ago recently. We have ups and downs of house prices but over all it's a good buy if you're in it for 40 years.

My career choice? We spent a lot of time talking about careers particularly with my father (my sister more than I - she went on about it for ages) as he drove us to school every day by car in our teens. I can remember better my 3 chidlren in their 20s now than myself in the last 70s and they and their friends are well aware of which jobs require lots of hard work and high pay and which are low paid and hard work and which are low pay and not hard work. I think they're making informed choices. My father's and indeed my own advice is to pick work you enjoy (and I love mine and I'm lucky) that you'll enjoy for the next 40 years. That probably won't be stacking shelves at Tesco which may not be intellectual challenging enough for many. Variety, change development make work interesting.

When I was about 10 or 11 I wanted to buy an island and I asked my father the cost and I did my little graphs and looked at what careers would earn what (although I seemed to assum 0% tax and that one could retain 100% of income to save so the sums were not too accurate) [ and I then did buy an island].

On the house price thing my daughter has the same ratio of earnings to house price for those 3 bed terraced places we started in.

There's a carer in today's weekend press who has moved every year starting very small and built up so that over the last 10 years now she has bought a place without a loan for £400k.