Buying vs renting

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Dr Lobster*
Posts: 2104
Joined: Sat 30 Aug, 2003 20.14

sorry to bore you all with a thread on grown up big boy things, but i'm just wondering... do you guys own or rent your main residential facility?

we currently own our home (well, mr abbey national owns most of it, to be fair) but we need something bigger... we're just completely out of space. we've probably not made much money on our house (getting it valued later in the week), so we're thinking of moving into rented for a while.

a few advantages of rented i can see are:

1) get much bigger house for same/less than we spend now (not far shy of 700 pm... we can rent something with 6 bedrooms for this around here)

2) if anything goes wrong with infrastructure (like heating etc) or buildings won't have worry about paying to fix it or have the hassle of sorting it out.

disadvantages:

1) will aways have to pay rent instead of eventually being mortgage free and so cost of living will never be reduced which is a good thing when you retire, so might have to work for longer or ensure we save enough cash to pay for rent.

2) can't perform any major changes to house

so, do any of you guys rent? do you want to onto the "housing ladder" and have a mortgage or you happy to stay where you are? i think it's fair to say the bubble has burst in the housing market and i don't feel we'd ever make much of a return on ours, having purchased our house when the market was on the way up (2005), we've made a little (hopefully), but nothing like those lucky few who made hundreds of grand.

btw, my mum and dad bought their first home in late 1970s for 7 grand... you can't even buy a citroen for that these days!
Alexia
Posts: 2999
Joined: Sat 01 Oct, 2005 17.50

Mrs Alexia and I rent a one-bed ground floor flat 10 minutes from the city (Newport - city?? Pwahahaha....) centre with off-road parking and a garden. £350p.m. inc water.

As comparison, three bed-houses going for approx £85k round here.
Dr Lobster*
Posts: 2104
Joined: Sat 30 Aug, 2003 20.14

£350 pcm, bloody hell. i wished my could find somewhere that cheap!

but 85k... that's still pretty cheap for a 3 bed house.... similar around here are about 120-140,000 depending on location (and MUCH more than that if you're in one of the leafy desirable suburbs like castle rising, the woottons and so on)

this sort of thing is quite typical for those areas: http://www.rightmove.co.uk/property-for ... 41416.html
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tillyoshea
Posts: 364
Joined: Sun 23 Nov, 2003 14.34
Location: Newcastle upon Tyne
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My girlfriend and I currently rent a fairly small two bedroom flat for £600pcm. This was about average for the area four years ago, when we moved in, and is now pretty cheap - the landlord has never put our rent up.

Our landlord has decided to sell the flat... for £169,000.

We're thinking of using the opportunity to get on the housing ladder... though not in the area we currently live in, since we're not clinically insane... Though I guess paying the rent we've been paying for the last few years has been fairly mad.

As a comparison, a three-bedroom town house can be bought for nearer £130,000 just down the road.
cwathen
Posts: 1309
Joined: Fri 15 Aug, 2003 17.28

I rent, and am seemingly the only person alive with no specific desire to 'get on the property ladder'. Short of winning the lottery or other big windfall, I don't imagine that I'll ever own my house - and I don't particularly care.

I have a very reasonable rent (If I took out a mortgage on a place similar to mine the monthly repayments would be way more than the rent), I have a good landlord which lets me treat the place as if it were my own. He never intrudes, I can do whatever decorating I like and the let was unfurnished so I've personalised the place and it's just as much of a home as is any bought property except that I'm not responsible for the cost of any major problems that occur. And if the place is no longer suitable for what I need, or if I get offered a better job elsewhere and have to relocate, or if I just get bored with it and fancy living somewhere different, I only need to give one month's notice and I can wipe my hands of it.

Frankly, the alternative - buying and paying back a mortage and moving becoming a big complex deal, just doesn't appeal with the current state of the property market. To me, the whole attraction of the 'property ladder', is that it should be just that - a ladder which you climb up to eventually reach the top where you outrightly own a property you like, and then at retirement you can either stay there in your nice big house for free, or you can downsize to something smaller and get a nice big wodge of cash to enjoy your retirement with.

In my parent's day, that's exactly what you could do. Anyone with a reasonable job could save up a deposit and get a mortgage. When you wanted to change your house, jumps up the ladder were relatively easy to make. My parents started off in 1981 with a two bedroom mid terraced house with allocated parking space, this was upgraded in 1985 to a 3 bedroom semi-detached house with garage, which in turn was upgraded in 1994 to a 4 bedroom detached bungalow with garage and a hefty bit of land around it where they still live and have almost finished the mortgage on. They are currently debating whether to stay there or to downsize to a one bed flat but which will release a whole load of cash for them to live extremely comfortably.

My parents have always earned a reasonable wage, but they are not highly paid by any stretch of the imagination - this is simply what anyone with a half decent full time job could expect to achieve - this was the whole argument to owning rather than renting.

The ridiculous hikes in property prices which took place between the mid-90s to mid-2000s has seen my parent's current property increase in value from £64,500 in 1994 to £300,000 today. This kind of value is wonderful if like them you've reached the top of the 'property ladder', but if you take a step back and look at it, even allowing for inflation it is ridiculous that their home should be worth that much.

The 'property ladder' is now collapsing under it's own weight in that only people at the top can benefit, those on it trying to move up find the gaps between the rungs on the ladder to be massive, and those trying to take their first step onto it find that first rung rising ever higher.

Hence we've ended up in a situation where a decent job and a couple of years saving doesn't get you a healthy deposit and mortgage on a two bedroom house, but a graduate job and savings from childhood gets you almost a full mortgage for 40 years on a one bedroom flat which isn't even yours after you finish paying for it because you bought it on some dubious shared equity scheme.

Unfortunately, people don't see sense and realise that (at least at the moment) buying is for those allready in the system or the rich and for everyone else renting is the better option, but instead jump at the chance just to say to themselves 'I am on the property ladder' - perhaps not considering that they've taken on a much bigger financial commitment than previous generations did to end up with a lesser property than previous generations had - and they're pretty much going nowhere with it.
Neil Jones
Posts: 661
Joined: Thu 11 Sep, 2003 20.03
Location: West Midlands

cwathen wrote:I rent, and am seemingly the only person alive with no specific desire to 'get on the property ladder'. Short of winning the lottery or other big windfall, I don't imagine that I'll ever own my house - and I don't particularly care.

I have a very reasonable rent (If I took out a mortgage on a place similar to mine the monthly repayments would be way more than the rent), I have a good landlord which lets me treat the place as if it were my own. He never intrudes, I can do whatever decorating I like and the let was unfurnished so I've personalised the place and it's just as much of a home as is any bought property except that I'm not responsible for the cost of any major problems that occur. And if the place is no longer suitable for what I need, or if I get offered a better job elsewhere and have to relocate, or if I just get bored with it and fancy living somewhere different, I only need to give one month's notice and I can wipe my hands of it.
You're not the only one with no specific desire to get on the property ladder. It would be nice but I wouldn't move heaven and earth to make it happen.

I rent from the council. It's the cheapest way of having a place of your own. Yes it carries stigmas, the properties range from complete dumps to half-decent and you can tell they're council buildings and estates a mile off, but my monthly rent is "only" just over £240 a month for a one bedroom apartment. Even the cheapest tracker mortgage I've been able to find comes nowhere close to that.

Plus of course if anything major happens such as a heating failure or a major leak or whatever, I don't have to worry about fixing it. Phone the council up and they'll send somebody round to fix it. In their own time, it would appear. Providing you pay rent every week, you can't get kicked out unless you do something incredibly stupid.
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Sput
Posts: 7543
Joined: Wed 20 Aug, 2003 19.57

I think I would rather own than rent just in princple, because I'm acutely aware that I piss away £550 a month on a flat. It'd just be nice to have something to show for it after a few years. A mate is currently buying a house and the mortgage payments will actually reduce his outgoings every month as he won't be renting any more. He'll have a better place, to boot.

Obviously I could choose to piss away less, but frankly it's ace and utterly in the middle of town.
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Gavin Scott
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After a decade in private rental I managed to get a foot on the rung in March.

I'm very lucky that its city centre, double the floorspace, recently refurbished, and has the central heating which I have long dreamed of - albeit its only been on one day since May, as the place is so well insulated I'm not sure its necessary. And perhaps I'm used to being in a less than snug environment.

I have no complaints about my 10 years of renting, although when you add up how much money I paid over the term its a little shocking; but that's not to say I didn't get value. I had a place where I wanted to be for a long time.

My only concern was what would become of me if I either reached retirement or found myself unable to work in later years. I can take out certain insurance for events like that as a home owner (or indeed, make it to the final payment of the mortgage and the place is all mine), but what do you do if you retire and have a piddling income? How will you pay your rent then?

Although it has its benefits, renting isn't a secure environment. Even with long standing lets and good landlords, you're not in control of the property, or their desire or need to dispose of the property.

Council tenancies are no longer assured either - this Government intends to rescind the rule about "indefinite letting" - so you will possible be given notice to quit at some stage - and further changes may allow councils to give notice tenants with no compulsion to re-home them. Trust me - its definitely coming.

But all of that said, although everyone has the "right" to own property, some confuse that with a sense of entitlement. People who simply don't have the income shouldn't be given mortgages that will overextend them, as that's where the another financial disaster lies.

But on the flip side, banks and building societies who make things painfully difficult for those who are, in fact, good candidates for a mortgage loan are being very unfair.

There should be rigorous scrutiny in applications, but to impose usurious interest rates on anyone who cannot afford up to 25% as a deposit is simply unjustifiable.
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m-in-m
Posts: 259
Joined: Sat 05 Apr, 2008 22.26
Location: West Suffolk/Cambs

I've been in my flat for nearly three years now. Previous to that I was living at home with my parents. I have always wished to own my own place but realised that I could never afford to do that if I moved out and started renting.

I was fortunate that in having been made redundant in 2005, and having had a sharesave scheme payout the same year I had a reasonable lump of a deposit saved up. It still took me another two years following my redundancy to manage the deposit. I only managed a bank giving me a mortgage because
  • Firstly I was training to be an accountant and they were more likely to lend
  • Secondly I had payslips directly before applying for my mortgage including overtime and my adviser therefore declared a higher salary figure
  • Thirdly I took an interest only mortgage - working on the basis that as I was studying to become a qualified my salary would increase throughout my studies
I have since moved away from accountancy in my firm and into another department but qualified in that area as my firm sees it and seen my pay increase substantially as a result. I have been prudent in that I am now overpaying on my mortgage to start reducing the capital balance. I am not stupid and accept that if I was to sell my flat today I would not achieve the price I paid for it - but in the end I look at property in the long term and hopefully my decision to buy a few years ago will help me enjoy a retirement without worrying about how I will pay my rent.

My pension arrangements are however less positive - though hopefully they will be on the up shortly.
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WillPS
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I too have no burning desire to buy. I don't buy in to the 'security' argument, if you don't have a house and you don't have an income you get housing benefit - not that I intend to scrounge off the dole all my life, just it's there if needs be.

As it stands my girlfriend and I rent a nice 2-bedroomed house in a snug North Lincolnshire village for £450pcm - even on my piddly small student placement wage we can afford to live fairly well so I don't see why post-graduation I can't just find a similar place (maybe a little more centrally located) and just save the excess.

Home ownership is a bizarre fixation in the UK and it causes all sort of problems at both a personal level and at a wider scale the economy. Over in the continent it is the norm to rent and save before buying in full, in cash - that's what I intend to do!
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