Buying or Renting. Which is the better option. Interesting debate.

Hedge

Hedge

Hedge

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Somewhere in the middle.
On another forum i visit someone is saying that Renting property is the best option.

His initial post is this.

"Renting ISNT a waste of money - although most people seem to say this like its the truth.

If your rent on a place is LESS than what an interest only mortgage would be, its financially BETTER to rent.

.... case in point, my flat costs less than HALF what my landlord pays in a mortgage. So he has to find the other half each month to make the payment up. Also, the flat is now worth nearly 60 grand LESS than what he bought it for - not much of an investment eh "

What do you guys think of what hes saying. Ill update the thread as things go on :)
 
It really depends on the situation of the person involved, the area, the particular property and a million other factors. There is no black and white answer.

At present, I think buying a property in the area that I am moving to would be a bad idea given current market conditions therefore I feel much safer renting. The property I will be moving into will be costing me about a grand a month in rent, and I realise this will effectively be 'dead money' but I deem the risk of buying into an expensive mortgage too great given current conditions.

I'd much rather rent a luxury apartment in a prestigous area than buy a pokey terraced house in a dodgy area.
 
".... a flat down here costs 250k ... which is 1700 a month in repayment mortgage.

You can RENT the same place for 850 a month, and pocket 850 to save in whatever way you want. If you did that over 25-40 years you would have MORE money after all that, than if you put it in property (if we are talking averages).

Meanwhile, you can rent and never need to worry about anything breaking and you having to foot the bill or anything like that. Plus you have the flexibility of moving and doing whatever you want, when you want.

Renting is no worse than buying - its a lifestyle choice. Neither is any better than the other."

Hes bringing up points ive never really considered. I was always more for the whole buying over renting thing. But i see where hes coming from
 
Hedge said:
".... a flat down here costs 250k ... which is 1700 a month in repayment mortgage.

You can RENT the same place for 850 a month, and pocket 850 to save in whatever way you want. If you did that over 25-40 years you would have MORE money after all that, than if you put it in property (if we are talking averages).

Meanwhile, you can rent and never need to worry about anything breaking and you having to foot the bill or anything like that. Plus you have the flexibility of moving and doing whatever you want, when you want.

Renting is no worse than buying - its a lifestyle choice. Neither is any better than the other."

Hes bringing up points ive never really considered. I was always more for the whole buying over renting thing. But i see where hes coming from
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He does raise some valid points. For a given budget per month, you can rent a much nicer property than you can buy. E.g. myself. I am moving to Winchester in a couple of months. I have set myself a maximum budget of £1200 a month for rent. I can get a luxury 2/3 bedroom apartment in a prestigious development in a central location within this budget easily.
If I was to get a mortgage with a budget of £1200 a month, I would have to buy a smaller flat outside the town in a less well to do area.

I'll take the fancy gaff thanks. I'll worry about buying when I'm older or settled.
 
Hedge said:
If your rent on a place is LESS than what an interest only mortgage would be, its financially BETTER to rent.
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There are certain flaws/caveats with this argument:

1) It assumes that the value of your house is static - i.e. at the end of the mortgage term, the house is worth the amount you owe the bank. If the value of the property increases then you need to factor that in compared to renting.

2) Renting / Interest-only mortgages rely on people being able to invest their money well (especially for people who could otherwise afford a large deposit).

3) Owning your own home gives you more rights than you have as a tenant in terms of wanting to do things to the house, and not having a landlord come round :)

I think it depends a lot on the area. I mean if he can rent the same place for 850 as would cost 1700 then that's certainly appealing. Whereas in my street, we have a mortgage payment of £775 a month for a 3 bedroom house, whereas one of our neighbours is paying £550/month rent for a 1 bedroom ground-floor flat. I know which I prefer.

There are cases where renting is preferable to ownership (especially if you are likely to want to move for whatever reason... kids, jobs etc) however it sounds to me like the landlord has cocked up somewhere if his mortgage payments amount to more than double his rental income (assuming it isn't a very short-term mortgage).
 
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same here, place im in atm is £950 a month, yet to buy it would be £300k or so, a lot more a month.
 
I don't earn enough to get a mortgage on anything bigger than a garden shed at the moment, despite the fact that I could technically afford the repayments. So renting is my only option. Also means I don't have to mess about fixing things :)
 
IMO It's all a matter of financial situations. If you can afford mortgage payments or can find one cheap enough, buy as quickly as possible so that you're able to get on the property ladder.

There's no greater investment than bricks and mortar. Although that could change, I think property prices is starting to hit its limit now.

I'd be quite happy renting for a couple years to get some money together to decide if I want to move to Canada or stay and buy a place.
 
^As an aside I think the 'property ladder' is a bit overplayed in this country. There is this assumption that house prices will rise forever, which simply isn't logical as eventually they will get so overpriced that most people will be priced out of the market and move to other areas.

I think with the telecommunications boom in recent years geographical location is getting slightly less important in terms of the job market too. The LAN is fast becoming a WAN as more and more tech companies are setting up offices outside of London. But that's a whole nother issue.

Moving back onto the issue of the property ladder, a friend of mine was talking to us the other day in a very matter-of-fact tone, asking about when we would want to be moving into somewhere better. Basically saying that moving up the ladder is good because then you make more profit on the house price going up. But I don't really look at the housing market that way, it's not like some game where you house is just an investment commodity you should be looking to trade up whenever you have the cash.

The British mentality is in part to blame for our high house prices in my view, it's almost as if people think that everyone should have a divine right to own their own home, and that 'getting on the ladder' is the most important thing that young people should aspire to.
 
Well said, Hangtime. I agree that there is far too much emphasis on getting ones foot on the 'property ladder' (a phrase that despite coining, I despise). This often clouds the judgement of potential buyers/renters and usually precludes good financial logic and common sense.
 
Depends really, a house will be yours after 25 years where if you rent for life then you will never have bricks and mortar but probably more savings than somebody with a house.

Renting is easier to just leave than having to sell a house plus all the fees.

If I was renting it would have to be a nice flat than a house or scummy flat.
 
cheets64 said:
Depends really, a house will be yours after 25 years where if you rent for life then you will never have bricks and mortar but probably more savings than somebody with a house.

Renting is easier to just leave than having to sell a house plus all the fees.

If I was renting it would have to be a nice flat than a house or scummy flat.
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Living in dublin, a 100% mortgage in the current market would be verging on financial idiocy.

A large number of people have found themselves in negative equity of late, which is not a nice thing at all.

Also, most new houses here aren't worth buying IMO, as the build quality is awful (a product of getting up as many houses as quickly as possible), so I likely wouldn't make use of the first time buyer's affordable housing thing they have going over here.

House prices here are nothing short of insane!

You can get cheaper in the countryside, but then you can't get decent broadband (if at all), and its miles from anywhere. Boggerland for the lose- I'd rather stay in the city and rent.

Currently living in a gorgeous 3 bedroom appartment which is bigger than many 3 bed houses I have lived in, and enjoying my fibre-all-the-way-to-the-router 8 meg up and down, zero contention broadband of awesomeness. :D

TG
 
I agree with the homes they are throwing up now and they have been since the 90s they are wafer thin, the over look too many gardens and just generally feel small, My parents house where I live is class, its a Bungalow and they added a 2 bed dorm on 20 years ago.

So its not a 4 bedroom bungalow 3 big bedrooms with 1 small bedroom which can be used as a office, large living room where the old master bedroom was knocked through for the stairs. Kitchen and Dining room extension with single garage back garden and front garden, in a cul de sac right next to acres and acres of farmers fields.

House was worth £7,000 29 years ago, should be worth £160/170 due to its location next to the M6, If I was looking for a house it would have to be circa 1970 anything after the 90s is pish.

Not only that house built now have no front garden, They don't even have walls, you cant beat a nice brick wall on your front garden.

If I knew I could get the same house now and street life I would get one now but you dont know what you or who your are buying next to now.

I get 20 Meg Cable piped down the street. :D
 
"Property ladder"...bah! People remaining in as much debt as possible for decades in order to acquire more theoretical money.

Unless you are rich enough to have at least two properties, owning a house isn't real money. Take me, for example. I bought a house for £28K. It's now supposedly worth £80K or more. Maybe £100K, I don't know. All right! I've made over £50K! Except that I haven't. I'd only get the money if I sold the house, and then where would I live? or I could die, in which case the people in my will get more money, but what good is that to me?

I bought a house because I didn't fancy paying rent all my life. The plan was to have the house paid for by my early 50s, then start saving so I wouldn't be quite as poor when I was old. Unfortunately, I believed what I was told about endowment mortgages, so that plan is dead.

Some days, I wish I'd rented a council house instead. Free kitchen upgrades, free decorating every year, free central heating upgrades, free double glazing...then you can buy the house for two and six.
 
Scuzi said:
I am moving to Winchester in a couple of months. I have set myself a maximum budget of £1200 a month for rent. I can get a luxury 2/3 bedroom apartment in a prestigious development in a central location within this budget easily.
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OT but you'd better hope you have parking, because there is a total lack of permit parking in Winchester.
 
HangTime said:
The British mentality is in part to blame for our high house prices in my view, it's almost as if people think that everyone should have a divine right to own their own home, and that 'getting on the ladder' is the most important thing that young people should aspire to.
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Well said. I was watching a program called Property Prophets (i think) and this couple wanted to buy in London. Because of their budget they were looking in some pretty grim places. But they ended up looking at rough places (that were due renovation sometime in the near future), just so they could make some money in the long run. I'd rather live in a nice house/flat in a nice area.. not live in a rough area in a shoddy house you cant afford to renovate, for 5-6 years just to make a bit of profit when the area gets a bit of money?! :confused: It's madness!
 
The property argument nearly always comes down to one thing, are you trying to make money or have somewhere to live?

Buying somewhere to live is not the same thing as buying somewhere to make a profit, and that is the real key. If you have a solid financial base and don't plan on changing areas, buying a property gives you security (your landlord can't decide to sell the property/not renew your lease) that renting does not, if gives you a lot more control over what you can do with your home and so on. The fact that it may make you money is neither here nor there.

If you're trying to make a profit, not sure whether you are likely to stay in a certain area or unsure of your financial stability, then the situation becomes a lot more complicated.
 
Short & Sweet....

Im an Estate Agent... do what you feel is best... But If your a guy who is good with finances.... then Buy....


Rental is dead money..... chucking away money that could go towards a mortgage.... Nuff said.
 
Renting is a PITA and I'm getting fed up with it. On your own place you can get problems fixed properly, first time, every time. When you rent you have to put up with ******* estate agents being snotty on the phone, flat inspections from said snotty estate agents at completely inconvenient times and they uppity when you can't fit in round them, then you have to put up with the fact that you can't change the decor and when you move out you risk losing the deposit. We're in an awesome flat but the sad fact is it's funding someone's retirement and she's tight fisted and the estate agent is frankly rubbish, so nothing ever gets done properly.
 
Renting < Buying.

LSH < FH

Well, thats what i think.

Are you not more limited to what you can do to the building when you are renting? Ie, you cannot decorate it to how you want it (unless your landlord doesnt give a doodaa)?
 
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