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!

MrsMerryHenry - In answer to your question, I think I was so blown away by the idea of living in central London- I mean REALLY central, just off Tottenham Court Road (and 15 mins walk to work) - that I didn't really take into account the short comings of the property when I viewed it. Also, I found it in Loot as a flatshare, and the flatmate seemed lovely - so much so that he later turned into DH!

I will never be too old to take risks. Risks are fun within reason. I hope I'm taking risks in my 90s. In fact that's when I'll take up sky diving as I'm not sure I want to rot away somewhere...

I do understand that it's like to buy now as I've 3 children in their early 20s 1 or 2 of which will or are contemplating exactly that.

The deposit issue is difficult. When my exhusband bought his own place he'd saved with one building society since he was about 5 to build up a track record (this was late 70s ) and mortgages were massively rationed and you needed huge deposits. Inflat was I think 25% and interests rates in the early 80s anyway 12%. It has not always been a bed of roses to buy in the past. His building society turned him down flat. Anyway luckily his parents made him a loan. There are these days some companies setting up or who have set up to fund the deposit element and I think also the costs element - it's a good business plan really as long as the lender thinks they could get their money back in due course. Property is probably better than shares. Talking to someone yesterday whose shares were down from £1m to £14k. Wow.

I think this recession is showing a North South divide at the moment. There might be merit in a bit of on-your-biking down from Hull, scunthorpe and even Scotland down to places like Slough and reading even if you sleep on sofas for a bit. There's more money around down here. We did that - left everyone, took risks and it worked so well.

'I will never be too old to take risks. Risks are fun within reason. I hope I'm taking risks in my 90s. In fact that's when I'll take up sky diving as I'm not sure I want to rot away somewhere...'

When it comes to the roof over my childrens' heads, Xenia, I, a person who used to climb cliff faces free solo, am understandably a bit more prudent.

'There might be merit in a bit of on-your-biking down from Hull, scunthorpe and even Scotland down to places like Slough and reading even if you sleep on sofas for a bit. There's more money around down here. We did that - left everyone, took risks and it worked so well.'

OH PLEASE! Come down to a shole like Slough and sleep on a couch with three kids, there's money here.

Well, hey, I found a 2p piece on the pavement today. There's money here, too!

Rip your kids out of a good school to move to a place you hate.

For what?

To buy some over-priced dump you can't afford?

My eyes glazed over the second the 'on your bike' line was trotted out.

That's the kind of tripe gits use to justify sticking it to anyone outside the London/SE bubble.

I'm not so sure. We always took risks with property. Had paid off the mortgate on the last place but used every last penny to buy this place including using children's savings, this which then went up £1m; and I remember that awful black Monday when interest rates went first to 8% and then I think 12% and we had negative equity and a mortgage 4 or 5 x earnings. But it still worked. I have total faith in my ability always to earn more money. I feel like I've barely started given my commitments to children for 25 years. How much fun my 50s will be without those commitments. It's going to be great.

'I have total faith in my ability always to earn more money. '

And you have the experience and background to do so.

But I don't believe in general this is a good thing for everyone to do, tbh.

There was another thread on here, about life insurance, and there were unfortunately some people who are in nowhere near as good a position you are to earn money, nor will be, not having had much of an education, who are at extreme likelihood of having their homes repossessed.

And there is plenty of unemployment all around the entire UK.

There certainly is. But I also know people who have moved. Our cleaner moved to this country to get work and is working very hard, bringing up her family h ere. Like me she will work very long hours and I am sure would be prepared to do 2 or 3 jobs. My children's father would do one full time job and then another 30 hours out of work at something else. You get some women who will work all night one day a week cleaning or whatever to earn more and gradually they build their income up and others who don't. It's partly mind set. They move countries, they move around the UK (as I did). I pursued and have pursued all manner of different ideas and plenty have totally failed, probably every week something fails but if 10% work then it's okay.

'Our cleaner moved to this country to get work and is working very hard, bringing up her family h ere. Like me she will work very long hours and I am sure would be prepared to do 2 or 3 jobs. My children's father would do one full time job and then another 30 hours out of work at something else. You get some women who will work all night one day a week cleaning or whatever to earn more and gradually they build their income up and others who don't. It's partly mind set. They move countries, they move around the UK (as I did).'

Good for them!

Their goal is obviously material wealth and they are willing to risk their health and social relationships (it's really not healthy to go with so little sleep for most of us and working so much would put a strain on personal relationships) for financial gain.

As it takes all colours to make a rainbow and variety is the slice of life, it's well known that not everyone has such abilities.

But you're right, it's partly mind set.

You find people who put financial gain above all else admirable.

Others find such people insufferably dull.

Yes but havnig a lot of mnoey means I'm not scrubbing lavatories at home as someone else does that (and we've got five) but have time to cuddle and talk to the children. I think you can have a very balanced life as a high earning alpha mother and the more money and power you have the more control you have over your life. I decide when and how I work and if I retire at 50 or 80. Anyway I accept not everyone in high paid jobs can. NHS female surgeons will have their lives to some extent curtailed by managers and NHS employment rules.

But the bottom line is if I earn in an hour what some people earn in a week that gives me more not less time to be fun and have a balanced life.

I think that people have become immune to the idea that buying property involves financial risk and more especially if it involves a mortgage.

When I here people say 'property only ever goes up' I shudder. The fact is that the last 50 years have been extremely unusual. I am not saying people should not take risk. Me and DW take great financial risks for a living but we rent because we just think houses are still massively overvalued compared to wages and our monthly rent is lower than our mortgage would be. Hence there seems little benefit at the moment and a very little fundamentally to support house prices.

Just this morning there was a news report said that the number of first time buyers had halved in the last 6 months. It is they that are the lifeblood of the market - without them the market cannot revive but they are burdened with debts and have poor job prospects. Look at all the young graduates with no job and a student loan. Few of them can afford to buy a house and no one on benefits or minimum wage jobs can either so which young person can contemplate buying? Not many can, which begs the question who are the older people going to sell to?

Go back the 1930s and the Depressions of the 19th Century and the fact is many many people lost their entire livelihood buying property on a mortgage that had multi-generational impacts. Well off families were cast into poverty for generations. In the village where I grew up the local Lord literally knocked down great country house he could no longer afford to live in during the 1930s and the entire estate sold off.

'But the bottom line is if I earn in an hour what some people earn in a week that gives me more not less time to be fun and have a balanced life.'

And your point is (other an a smug suggestion that if everyone's not like you or your cleaner or slaving to the Almighty Pound they merit what misfortune befalls them)?

That's not true of many high-earners at all and all you have to do is trawl these boards to find that out!

You feel your life is balanced, and that's fine, but there are plenty of people working all the hours God sends for peanuts and they don't feel balanced, they feel sleep-deprived and stressed out and going nowhere.

Working all the hours God sends doesn't always equal rampant financial success.

I agree. Just looking at one my daughters (who is a student) gives me a tiny element of insight. Being in a team of people sent to a corporate event, needing to get to X in London by 6.30am to get a train to a venue etc etc and she would do that in the context of being fed and housed by me whereas plenty of others don't.

Certainly education helps many women. Picking careers which are secure with high wages as a teenager, going to your library or on line these days looking at what people earn - was I the only teenager in the 70s borrowing that book from the library (?) helps.

I certainly recommend not watching TV or films ever (I don't) as I think it frees up a lot of time to think about other things never mind talk to your family.

Here's one idea - www.peopleperhour.com/

I respond to all ads on there where I could do the work. Perhaps one in 100 of my quotes gets something (I'm quite expensive and I'm not short of work) but trying all kinds of things like that helps. Going on linked in (I've got work from that), keeping up contacts, thinking laterally as to whom you know who might need even a cleaner or a few hours' babysitting. What about this - babysitting on Christmas Eve or New Year's eve - notes through doors all over the place - I bet there's demand and if you're very very poor having Christmas or NY a day later (when we'll be on the ski slopes although we might as well have stayed here to ski at this rate - it's beautiful here) doesn't matter at all if you've the NY eve babysitting money to spend. Drivers too -0 can be almost impossible to get someone to drive you on NY eve - again that's possible although of course only for people with access to a car.

Anyway I'd better get back to work and we're supposed to be on a about renting v buying on this thread.

FGS xenia have some humility and discretion.

Wow, 5 lavatories?

Do you wee in them in rotation in order to get full value for money?

I'm still trying to figure out why she is directing all these points to me, however amusing I find them.

It's pretty obvious I don't really give a toss about how much money a person earns.

I don't and never will own a property.

I believe I've more than once did a virtual shrug about that or writting 'c'est la vie' or written that I realise life is a trade off.

As usual, it's all about how to lay down for the Almighty Pound.

I find this perplexing, but again, amusing, along with the pervasive impression that being very poor is your own fault and hey, a very poor person can't possibly want or deserve to have any sort of Christmas or holiday (no regard for their children, either).

The lack of understanding and compassion is on par with, well, many Americans.

'Wow, 5 lavatories?'

I could respond (something along the lines of having the need to use so many lavs ), but I won't.

Please excuse the typos, since I had this laptop remastered the cursor jumps all over the place.

It's most annoying.

The way this thread is going reminds me of one not long ago,about modern homes having to many toilets.A poster announced that 5 toilets were no use to her as she only had one arse.

I still think of that and smile.

I don't think I ever direct comments at anyone in particular and the loos point is just a joke - there is no graph showing the more you have the happier you are although I do remember when we moved from one to two it did make a difference in terms of congestion. We all have the same bodily functions as everyone else.

So over the last 50 years since my late parents bought property it has gone up and down etc over the years but no one owning over that period, has lost out. So if you buy somewhere in your early 20s and own a property util you die ages 80 I am pretty happy it will be a good investment. Then let's go back further then... why is the Duke of Westminster rich - because... wait for it ... he owns property. So I don't even agree that if you take a period longer than 50 years it is a bad investment. Also for most of us it's not about making moneyat all . It's wanting to have power and control over where you live, security, roots, planting walnuts you can see grow to fruit, having a place psychologically which the family call home and in 30 years will be coming to with their own children, continuity, tradition.

I knwo in law actually no one owns outright actualyl technically - it's "freehold", held for the queen or something but in most sense it's yours. I am looking out over a lovely garden with massive trees and thinking they are my trees. It's that capitalist owning feeling that perhaps took the British off across the globe rendering much of it pink that is part of our psyche.

Now is a good time to buy. Go forth. You will not regret it.

'Now is a good time to buy. Go forth. You will not regret it.'

Pity about the deposit, fees and stamp duty.

My magic wand is just NOT working, I'm having a hard time conjuring up tens of thousands of pounds!

Maybe we should try the EuroMillions.

How very shallow thinking they are your trees. They are God's trees.

It's a legal issue, isn't it? If you rent you don't own the trees. I preserve the very ancient rainforest trees, 25 acres of them on my island near the Equator. I feel like guardian or custodian of trees but I still like the sense that they are mine.

Don't be defeatist on costs of buying. There are ways and means to work up from a small to a large place and plenty of women with nothing fuond businesses and make a fortune in their 50s. In your 50s your hormones change as a woman and your duties to your familiy usually lesson. It will be a brilliant time for me and many others to get on with stuff - if you're a capitalist and find taking risks fun.

Xenia - there is a saying that some of the old stockbrokers used to use:

"never mistake a bull market for your own investment genius".

Put simply, just because you, your parents and my parents bought houses at a point in history which in hindsight had rampant inflation that outstripped interest rates that does not make you or any of them good investors. Lets face it, any idiot that bought a house and maximised their borrowing over the last 15 years looks like a good investor but they were not. They just got very very lucky and happened to earn more from their hosue than earning a living. My parents certainly did. Without their house going up in value they would now be very poor as they earned very little in their life other than just about paying the interest on their mortgage. That process simply cannot go on for ever - people have to earn more from work than buying and selling hosues for the housing market to continue going up. If not then the economy will collapse as buying and selling houses from each other does not generate wealth anymore than buying and selling shares. It is what those assets earn in rent and profits that generates wealth. At the moment rents and profits are falling as people have very little spare money and cannot afford to buy things or pay more in rent.

On the lavatory issue - I have five of them too (and clean them myself). I just like to spend as little as possible in order to spend a penny.

Quick one here...

Regardless of whether folks have done well in the past or not re property market, the OP is probably asking whether it is good to buy or rent NOW.

Oh, this is a tricky one. As many people have said on this thread, we have to factor in cost of deposit, affordability, job security, etc.

At the moment, for us, renting is a far better option. Yes, we do not have the fact that we are building equity. But, we are in an excellent area with good schools, close to work, etc. Those are factors alone which weigh-in when considering whether it is best to rent or buy.

As someone else pointed out, there are other investment options. For us, we could save the excess and look to buy when I am back at work. We will then be in a better position to know where we are going to settle. Plus the type of mortgage offered, and interest rate, etc. I know that interest rates are low atm, but for some desparate to get on the ladder the choice in rates is limited.

Yes, in an ideal world it would be good to put down roots and pay off a mortgage, but things seem so unstable at the moment, perhaps there are better ways to safe guard your cash? I don't know. Are we really going to see the same rise in property prices in the next 10-years?

I think most people who buy now and hold for or have property for the next 30 years will be making the right decision. People hoping to pop in and out of the property market to make a quick buck unless they know what they are doing don't usually succeed. There are no other investments where there is no capital gains tax on the capital increase. That alone is going to mean for many that owning a property rather than making profits on other investments is a huge advantage of home ownership as an asset class although that might change although I doubt it. Just because property has always been a good investment for the last 600 years of course doesn't mean it always will be but it's a pretty good indicator.

If I was giong to be very risky I'd say we may be in for some gallaping inflation once we're over quantitative easing which is awful and I do not welcome but IF that does happen then my £1m etc of debt will be come very little just like happened in the 1970s inflation. I am not saying we will get massive inflation but even if we don't I still think buying your own home is a sensible plan.

I do agree with the comment above about personal timing however. I always knew my income would increase as I was in that type of career and many people know in their 20s they will earn more later. My daugher's income might nearly double in the next 2 years so she might well wait until then to buy which could make sense if she still has a job then.

Now is a terrible time to buy price wise.Unless you need to now because borrowing is cheap I would wait til this time next year.I bought last winter and the value has rocketed and everything selling too Many houses going for over the asking.If yo buy something that has been on for months you may get a bargain but houses atm have almost recovered and in some cases have 2007 peak.