Living costs: Flatshare vs Own flat

rOAdeh

rOAdeh

rOAdeh

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Joined
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618
Location
Sydney, Australia
Hey all,

I've been living in flatshares for the last 5 years or so and am starting to think that I'd quite like my own space, but I'm concerned about the cost. Currently I'm living in a nice flat in a decent part of London but its costing me about 40% of my income (post tax).

I realise living on my own will be more expensive as I will be paying bills on my own, which is particularly important when it comes to fixed bills like council tax etc.. but I was just wondering if anyone had any experience in what a realistic increase in expense it would be?

Cheers,
 
I pay about 45% - 60% of my post tax wage on living on my own in Manchester, living alone means you can be much more in control of spending I found. (in terms of bills)
 
rOAdeh said:
Hey all,

I've been living in flatshares for the last 5 years or so and am starting to think that I'd quite like my own space, but I'm concerned about the cost. Currently I'm living in a nice flat in a decent part of London but its costing me about 40% of my income (post tax).

I realise living on my own will be more expensive as I will be paying bills on my own, which is particularly important when it comes to fixed bills like council tax etc.. but I was just wondering if anyone had any experience in what a realistic increase in expense it would be?

Cheers,
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easy enough to work out.. find a place to rent, add on council tax for the band property it is - you'd get a 25% discusount as its just your - £30 a month for gas £30 for elec £30 for water £40 for internet etc - done. although the amount you pay will obviusly depend on what you use. thats an approixmate guess and its what i pay living in a three bed house
 
Just find better flatmates tbh...

In general you're going to be worse off financially through living on your own and as long as you're living with decent flatmates I don't see how coming home to an empty flat each night is going to be particularly fun.
 
dowie said:
In general you're going to be worse off financially through living on your own
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This simply isn't true unless you have a very short term view, though renting can certainly be a good thing to do depending on personal circumstances.

I rented for 7 years and when I added it all up and found that someone someone else had over 25 grand of my money, rather than me having 25 grand worth of equity (plus 7 years of housing market rise extra 'profit') in my own property, it suddenly seemed a bit daft that I hadn't bought my own place a bit sooner.
 
Is that £4425 per person or per property,

@ above, 25 grand over 7 years isn't that bad for rent considering you dont have to pay maintenance and building cover etc, was that by yourself in a decent place/area?
 
40% of post-tax earnings.

So lets say he pays 600pm for rent.
After tax monthly 1,500.
Annually 18,000 after tax.

Thats probably about a 25 grand salary.


Your advice is to BUY a NICE 2 bed flat in London...think about that one for a moment.


And your tax free allowance is wrong.
 
firefilesuk said:
Is that £4250 per person or per property,

@ above, 25 grand over 7 years isn't that bad for rent considering you dont have to pay maintenance and building cover etc, was that by yourself in a decent place/area?
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Its a £4,250 allowance for renting out part of your home to a lodger. The home you rent must be your home that you spend most of your time in, so can't do this for multiple properties.
 
mulpsmebeauty said:
This simply isn't true unless you have a very short term view, though renting can certainly be a good thing to do depending on personal circumstances.

I rented for 7 years and when I added it all up and found that someone someone else had over 25 grand of my money, rather than me having 25 grand worth of equity (plus 7 years of housing market rise extra 'profit') in my own property, it suddenly seemed a bit daft that I hadn't bought my own place a bit sooner.
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It doesn't really work like that. Most of that 25 grand would have been spent on mortgage interest so the only "profit" would come from increased value and as you know some people will be worse off right now due to falling house prices.
 
Spike560 said:
40% of post-tax earnings.

So lets say he pays 600pm for rent.
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You'd be very lucky to find a room in a nice flat for £600 in London! Though I suppose it depends how you define 'nice'.
And your tax free allowance is wrong.
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Indeed it is, it's £4,250. That's what you get for talking off the top of your head!:p
Is that £4425 per person or per property
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As above, it's £4,250 - It's a total allowance, called 'rent a room relief', and applies if you're renting out a room in your own house.

If you don't choose to use it, you can claim expenses against property income- such as mortgage interest, letting agent fees, insurance, council tax etc (though obviously only a portion of this if you're sharing the house with someone).
 
mulpsmebeauty said:
I rented for 7 years and when I added it all up and found that someone someone else had over 25 grand of my money, rather than me having 25 grand worth of equity (plus 7 years of housing market rise extra 'profit') in my own property, it suddenly seemed a bit daft that I hadn't bought my own place a bit sooner.
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Except in all likelihood your house would have lost value, and so you would have simply paid interest off on your mortgage, and lost money in real terms.
 
csmager said:
You'd be very lucky to find a room in a nice flat for £600 in London!
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I'm a nice flat in a nice part of London for less than that (shared, like the OP), as you say though I was very lucky!

Even so, I'm guessing the OP is on 30k or less, banks won't even look at you unless you have hefty deposit with that kind of a salary.

Also, most banks won't let you rent out a mortgaged property that you live in as it breaches terms and conditions. Possibly insurance terms too. You would have to opt for a buy to let mortgage for that. The knock on affect of that is that you would then have to live somewhere else. So be paying rent somewhere and then receiving rent for another property that you are paying a mortgage on.

I looked into this recently as I am in a similar situation to the OP, just seems impossible to get anywhere near the ladder =/


EDIT: Forgot to mention, I called up Lloyds and Halifax for the possibility of a buy-to-let mortgate and was laughed off the phone for a couple of reasons;

Lloyds: Need to earn over 35kpa
Halifax: Need to be over 25
 
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mulpsmebeauty said:
This simply isn't true unless you have a very short term view, though renting can certainly be a good thing to do depending on personal circumstances.

I rented for 7 years and when I added it all up and found that someone someone else had over 25 grand of my money, rather than me having 25 grand worth of equity (plus 7 years of housing market rise extra 'profit') in my own property, it suddenly seemed a bit daft that I hadn't bought my own place a bit sooner.
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In 7 years you would not have £25k in equity if you had bought, you would have about £3k equity and paid about £22k in interest.
 
Spike560 said:
Also, most banks won't let you rent out a mortgaged property that you live in as it breaches terms and conditions. Possibly insurance terms too. You would have to opt for a buy to let mortgage for that. The knock on affect of that is that you would then have to live somewhere else. So be paying rent somewhere and then receiving rent for another property that you are paying a mortgage on.
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they are unlikely to care as long as you make your repayments, i know a few people who do this on standard mortgages, you may want to credit check the lodger or rent to someone with references etc to ofset risk.
 
mike66uk said:
I would say that on average, house prices are a lot higher now than they were 7 years ago.
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Indeed they are, and look at most mortgages that where taken 7 years ago; interest only mortgages and ones without decent deposits. So all they're doing is paying the banks off, and they still don't own much equity in their own homes.

Edit: as the above poster mike66uk said, most of the payments would have been interest.
 
mulpsmebeauty said:
I rented for 7 years and when I added it all up and found that someone someone else had over 25 grand of my money, rather than me having 25 grand worth of equity (plus 7 years of housing market rise extra 'profit') in my own property, it suddenly seemed a bit daft that I hadn't bought my own place a bit sooner.
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Well, you wouldn't have had £25k of equity. Nowhere near - unless you were paying zero interest on your mortgage...

For example, for a 25 year mortgage, on a 100k property (very cheap these days), at 6%, then your monthly repayments will be £644 - of which £500 is pure interest. So, only 22% of what you pay will actually go towards building up your equity.

Since you can invariably find a place to rent, worth more than £100k, for £500pcm or less, all you're really doing is shifting who you pay the money to. And do you really care whether you pay money to a landlord or to the bank? On £500pcm rent you could still save the extra £144 per month, and have immediate access to it if you need.

The only real benefit would have been the increase in the value of the house. But, if you're looking to trade upwards (or even sideways) at some point then you can expect to see this incresae in value reflected in the house you're planning to move into as well! The only way you "win" is if the value of your house increases more rapidly than the value of the houses you're planning to replace it with.

...If you're developing houses for profit (adding value to the house and selling) then it's a different matter of course. But for someone who owns (or rents) a single proprty as a home, the difference is marginal. For me, the only real benefit of owning a home is the security, and the lack of having to answer to anyone else. Which is something you can't put a price tag on!
 
Thanks for the replies guys but I think I need to clarify:

I'm definitely not interested in buying my own place at this time for a number of reasons: a) I can't afford it, b) I don't want the financial commitment as I'm wanting to go for a gap year next year and c) I'm not sure I'll stay in London that much longer even if b) doesn't happen

My original intention for this thread was that someone could say that 'I went from paying x% a month in a flatshare to y% on my own'. I don't really want to discuss salaries here, but if people are happy to put in actual numbers then that's great.

Dowie sort of hit the nail on the head - at the root of this is the problem that I'm increasingly disliking one of my flatmates (moved in with 2 random guys 6 months ago). I've always previously lived with friends and so there was never an issue of having mates over (particularly if they needed to crash etc), whereas here I feel like I'm taking over the living room.

I don't know whether its a London thing, 2 of my other good mates who live nearby don't socialise at all with their flatmates and seem to creep around them as much as I have to. Frankly I hate it and so if that's the norm then I would like my own space to use as I see fit.

The other option is obviously just move out and find somewhere else, but there's no guarantee that those flatmates will be any better...
 
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