House prices rose 7.3% this year, average now almost £250k
- Thread starter HACO
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I don't have any property funds in my pension portfolio, made sure of that
I still think your theory of avoiding buying property is flawed.
What's the probability of a landlord buying any property for sale? Shall we say 25% chance for simplicity?
So if you buy a smaller property to get onto the ladder - you may be taking away that opportunity from somebody else, but there's a 25% chance that other person was a BTL landlord. Then you'll give that opportunity back in a few years when you can move into something bigger and you'll get to choose the buyer so there's 0% chance it'll go to a BTL.
Every property you buy on your way up, and control the sale of, changes from a 25% chance of BTL to 0%. So really, the more properties you buy on your way, the more you'll have benefitted homeowners over landlords.
You do have a point there. Maybe I'm being a bit too difficult about the whole thing, but still can't bring myself up to relying on someone else's FTB purchase at a higher price to push myself up the ladder, feels like I'm pushing someone down to pull myself up and that's not how I want to do things.
Best quit your job while you're at it too - there were probably other candidates who wanted that job when you applied....
I'm not suggesting that you need to rely on other people paying a high price for your house and the price to have increased to move yourself up the ladder. You're still saving towards your end goal of the house you want but saving indirectly by paying off your mortgage rather than paying rent and saving in a savings account.
I'm not sure how it relates to FTBers? Not everyone who wants to buy your property will be a FTB - some will be moving up the same way as you are, some might be downsizing, some might be moving area, there's many reasons why people want to buy new houses. You'll obviously lose your own FTB status after the first step but the much higher ability to save for your next house will balance it out.
If you consider £1000 per month mortgage, £300 of that might be interest and £700 goes towards paying off the capital. A similar house might cost £1000 to rent and all of that money is lost to you.
You wouldn't need to rely on price increases at all. In fact, this is how I saved up for the house I'm in now. I bought a very small 1 bedroom house and lived there for 5 years and then sold it for the same price I bought it for but had enough equity in it to move to something much bigger.
I'm not sure how it relates to FTBers? Not everyone who wants to buy your property will be a FTB - some will be moving up the same way as you are, some might be downsizing, some might be moving area, there's many reasons why people want to buy new houses. You'll obviously lose your own FTB status after the first step but the much higher ability to save for your next house will balance it out.
If you consider £1000 per month mortgage, £300 of that might be interest and £700 goes towards paying off the capital. A similar house might cost £1000 to rent and all of that money is lost to you.
You wouldn't need to rely on price increases at all. In fact, this is how I saved up for the house I'm in now. I bought a very small 1 bedroom house and lived there for 5 years and then sold it for the same price I bought it for but had enough equity in it to move to something much bigger.
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That's not exactly the case in London, with rental yields close to 3% right now, and that's also what my interest would be on a 90% LTV mortgage (3.3-3.5%). So the rent is equal to interest part of the mortgage, and I can save the rest anyway, so no benefit to just getting on the ladder for the economics of it, unless there is price appreciation. I only want to buy a house because I want to live in a place I can call my own and customise to my preferences, and have stability.
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Caporegime
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Just lol.
You know prices are rising yet still continue to bang your head against a brick wall anyway regardless.
This post and the other before it have been absolute gems. Not buying a house because some other FTB can have it.
Your tune changes more times than the wind.
Like your own posts about buying a £20k flat in Paisley?
Yeh, no point getting on if the house prices aren't increasing (reads title of thread). Hmmm
London is its own animal.
Maybe I should listen to you and buy a £15k studio flat within 15 minutes of central London, by learning to travel at light speed and commute from Cumbernauld.
Read context. I was responding to a post which assumed no price increases.
Caporegime
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Would be better than your current plan
What’s the difference between you (a FTB) or anyone other FTB? How would you be pushing someone down?
If you mean outbidding/offering more then it’s just going to be worse with a more expensive house...or is the plan to stop that happening somehow?
No that's not the context. The context is buying a starter home to benefit from capital appreciation, then selling it to another FTB so that I can move up the ladder. I simply find participating in this scheme to be unethical and screwing over future generations for your own benefit.
The plan is, just wait longer until I can buy a home that I want to live in for the foreseeable future, e.g. something to raise a family in, rather than a starter flat for a few years until the price goes up so that I can use that to jump to a more expensive property. I may be financially worse off doing it my way and it may take longer, but I find it more ethical.
Generally people here object to my ethics and find it unreasonable
Soldato
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No that's not the context. The context is buying a starter home to benefit from capital appreciation, then selling it to another FTB so that I can move up the ladder. I simply find participating in this scheme to be unethical and screwing over future generations for your own benefit.
The plan is, just wait longer until I can buy a home that I want to live in for the foreseeable future, e.g. something to raise a family in, rather than a starter flat for a few years until the price goes up so that I can use that to jump to a more expensive property. I may be financially worse off doing it my way and it may take longer, but I find it more ethical.
Generally people here object to my ethics and find it unreasonable
Your idea makes no sense really. Renting is just unethical surely as you support the BTL markets and prop up a landlord whilst paying their rent?
Unless your rent is stupidly cheap, you aren't building equity or helping yourself.
There are valid reasons to want to rent, i.e. not sure you like an area, not planning to stay somewhere mid-long term. job takes you all around the country etc.
My mortgage is about half the cost of the rent on the 2 bed flat next to me, and my house is bigger than the flat. Not only is it cheaper, but most of my mortgage payments go into the property value. I can call the place my own, I don't get kicked out by a landlord who wants to sell up on a whim, and I can make improvements for my own benefit.
Buying or not buying somewhere is clearly your choice in the end, but your reason doesn't make sense to me.
This is what I was saying earlier because the rental situation you're thinking of is similar where I live too.
I was surprised how low rental costs are in London as a percentage of property value. 3% (per year) is normal so when compared to a ~3.2% mortgage (for 90% LTV) then the rental cost is less than the interest part of the mortgage payments. It's cheaper to rent so if you buy you rely on the property price increasing to get any benefit from it.
Although if you consider it'll cost around £30,000 for all the costs of buying (SDLT, valuation fees, solicitors fees, moving costs, etc) you only need a 4.5% annual increase in prices for 1 year to break even on an average London property (at £666k)
Soldato
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Alright yeah in that case I'd definitely agree, if the rental is cheap compared to property price then absolutely agree.
Prices don't always go up as well so relying on a price to go up to get onto the property ladder seems risky.
I was thinking more along the lines of my scenario, where my price could stay the same, but I'd be adding some equity/value along the way, and it would work out.
Well, my rent is cheap (3% of the value) and as @touch said, I'd be paying more than that in just interest alone. Right now I'm saving £2750 per month for the future deposit so I'll get there sooner or later.
Soldato
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Yeah like I mentioned if that is the case then that is a good reason to rent. In my area rent is often more expensive than the average mortgage!
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