Scott

Answer To 'should I Buy Now Or Rent' Questions

1,302 posts in this topic

Thanks for the reply Ader. Sounds like your doing the sensible thing by selling up an renting.

Whilst we thought our jobs were secure, in the past few months we have both had threats of redundancy. We still have jobs after cuts yet the threat still exists. So far from secure, but which jobs are these days? Saying that id rather have a different job before I bought to feel more secure.

If we did buy I'd obviously be really disappointed that we had if prices were to fall. It would probably be 15k worth of savings down the drain, however in one way we would be paying 5k a year in rent and would have paid off 2 years of mortgage too.

Were going to view the property tonight. We have only saw several photos so it should be interesting to see what the rest of the house is like and it's condition given the lower price.

I hope my fiancé doesn't fall in love with it and the idea as I'm really swaying towards renting for the next year or two, digging in and see what happens. In this time we could save more, enjoy life that little bit more and be risk free if our jobs did hit the fan. Whilst I am tempted by the lower price, I think it's true value is more near to 75-80k.

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Whilst we thought our jobs were secure, in the past few months we have both had threats of redundancy. We still have jobs after cuts yet the threat still exists.

public sector, nhs etc?

construction?

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Private sector

which part of private sector? serving what customers or other organisations?

(just interested)

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which part of private sector? serving what customers or other organisations?

(just interested)

Organisations mainly. I work in the creative / digital sector and OH works in admin / accounts dep. for a demolition / recycling firm who have saw huge drops in revenue.

Anyway, viewed the house. We both like it, looks to be in great condition (structure wise) with no visible concerns. Few things to fix, and decor but not too bad. I'm still happy to wait 2 years, but may be tempted to put a very cheeky offer in, to see where that gets us.

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Organisations mainly. I work in the creative / digital sector and OH works in admin / accounts dep. for a demolition / recycling firm who have saw huge drops in revenue.

Anyway, viewed the house. We both like it, looks to be in great condition (structure wise) with no visible concerns. Few things to fix, and decor but not too bad. I'm still happy to wait 2 years, but may be tempted to put a very cheeky offer in, to see where that gets us.

Good luck Barefoot, I hope it comes off for you

Edited by levoleurdefruits

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Hmmm, but what is "actual value"?

It would surprise me. To an investor who can get better than 5% yield on their cash by buying houses at todays prices then they could represent "actual", even good value, certainly when compared to bank interest. In my mind rental values remain a major barrier to the crash. Currently, I would say don't expect a HPC until bank interest rates are much much higher such that old money can go back to the bank vaults.

Don't get me wrong, I don't think our low wage-inflation economy can sustain high rents any more than it can sustain high house prices, but I am not sure that I can see how a rental yield crash can play out in conjunction with a house price crash. Buyers staying away actually fuels rental demand which, in turn, makes BTL more attractive to those who have cash. Interest rates SHOULD be sky high right now but they are artificially low for a variety of reasons which I won't go into now. The fact is that we are where we are and I see a crash as unlikely. The most likely outcome is stagnationShould I buy now?

DYOR particularly in relation to you local Market and of course, haggle hard.

But those last lot of remaining people who have cash to put into BTL have run out. Those same people will see their cash eroded as house prices fall. The rents are too high, house prices too high, rates too low. There is a massive inbalance to be corrected and governments have run out of tools and cash to keep it going.

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I'm buying. Live in zone 2 of North London, it's cheaper to buy rather than rent. Looking to move in with my soon to be wife and want a 2 bed in a quiet area no more than 10mins from transport.

Rent would be ~£1,200-1,400 PCM

Mortgage is £1,100 PCM

Buying is a no brainer to me.

I don't expect prices to rise but I also don't expect a large fall but we want a home which is ours rather than an investment.

Just saying this to show this forum isn't full of HPCers....

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Just saying this to show this forum isn't full of HPCers....

Yeah, but they'll be out to lynch you for it! :) I was the same, wanted a particular place but renting would’ve been more than buying. Knowing that if it was decorated the way I like it would add a lot of enjoyment made it a no-brainer.

Previous place: Repayment mortgage £1300/mth. Currently rented out for £2275/mth.

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I'm buying. Live in zone 2 of North London, it's cheaper to buy rather than rent. Looking to move in with my soon to be wife and want a 2 bed in a quiet area no more than 10mins from transport.

Rent would be ~£1,200-1,400 PCM

Mortgage is £1,100 PCM

Buying is a no brainer to me.

I don't expect prices to rise but I also don't expect a large fall but we want a home which is ours rather than an investment.

Just saying this to show this forum isn't full of HPCers....

Surely Mortgage is £1100 CURRENTLY so it makes sense right now, but will it still make sense in 3 years time?

is this interest only or repayment? seems quite low for zone 2

Interest rates are at a historical low and the £1100 can only go up - only question is by how much and when

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'Owning a home has become more than £100 a month cheaper than renting, with a widening gap emerging, research suggests.'

That'll be the subsidy I'm giving the feckless wonkers then!!!

http://uk.news.yahoo.com/homeowners-pay-less-tenants-000457045.html

Why is it cheaper? Because it is being propped up. And when the prop is taken away by market forces, which it will be, house prices will collapse. What would you rather?

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Why is it cheaper? Because it is being propped up. And when the prop is taken away by market forces, which it will be, house prices will collapse. What would you rather?

That's the frightening bit. They could do it without warning and leave new buyers with 50K negative equity within 12 months of buying. Against that prospect renting still seems cheap by comparison.

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And I am pretty certain that Halifax are comparing the cost of a 3 bed house costing £199K purchased on an INTEREST ONLY mortgage with the cost of the average rental at £716 per month.

Otherwise, they are trying to tell us that an average 3 bed (purchased on a repayment mortgage) only costs £118K but rents for £716 per month. I think not......

‘owning’ is cheaper than renting. Pah. They really are devious bar stewards. Scum in fact.

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And I am pretty certain that Halifax are comparing the cost of a 3 bed house costing £199K purchased on an INTEREST ONLY mortgage with the cost of the average rental at £716 per month.

Otherwise, they are trying to tell us that an average 3 bed (purchased on a repayment mortgage) only costs £118K but rents for £716 per month. I think not......

‘owning’ is cheaper than renting. Pah. They really are devious bar stewards. Scum in fact.

It only works if you've got a big deposit. Using my area as an example you can rent a 3 bed house for 900 PCM. To buy a similar house in the same area is around £250k.

Using their quoted interest rate of 3.62% (same as SMI, coincidence?) you need a deposit of £64000 to pay the same on a repayment mortgage. For it to be £100 cheaper than renting as they say you would need an £81000 deposit.

Then you've got to account for maintenance etc that you don't pay on a rented house.

If you've only got a 10% deposit you are paying more than £200 a month more plus maintaince costs.

Edited by Pent Up

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Cut and paste this paragraph into google and see how all the crappy lazy media have just copied this piece of tripe.

"Owning a home has become more than £100 a month cheaper than renting, with a widening gap emerging, research suggests."

"research suggests." What research?

Via the Press Association.

Edited by "Steed"

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Cut and paste this paragraph into google and see how all the crappy lazy media have just copied this piece of tripe.

"Owning a home has become more than £100 a month cheaper than renting, with a widening gap emerging, research suggests."

"research suggests." What research?

Via the Press Association.

I think is a halifax press release. I saw an ugly picture of Martin Ellis on one of the articles.

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It only works if you've got a big deposit. Using my area as an example you can rent a 3 bed house for 900 PCM. To buy a similar house in the same area is around £250k.

Using their quoted interest rate of 3.62% (same as SMI, coincidence?) you need a deposit of £64000 to pay the same on a repayment mortgage. For it to be £100 cheaper than renting as they say you would need an £81000 deposit.

Then you've got to account for maintenance etc that you don't pay on a rented house.

If you've only got a 10% deposit you are paying more than £200 a month more plus maintaince costs.

And falls in capital.

The basic maths is rent compared to IR and maintenance costs. For a 3 bedded, I use a maintenance cost of about £100/month.

Then you can add - or subtract - how much the house will fall in value.

Transaction/ moving costs can be quite chunky - about 5K/6K which is getting on for a years rent.

Basically, you have to buy to stay these days. There was never such a thing as the housing ladder.

You will not trade up - christ in the places I monitor anyone who bought after 2003ish is stuck.

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As I have just heard on radio 5, this item is now being used as a nice bit of property ramping.

Has anyone in the media yet pointed out that IO is just renting from the bank, but with the dsadvantage of the fact the "owner" pays for the maintenance and takes the hit on any capital losses.

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The whole premise of BTL is the "itll be my pension one day".

And you can use the equity to borrow.

this is all true in a rising market.

renting per month could be more costly...its not in my case...I am thoroughly spoiled.

So lets take all the above as an overall picture.

Yes, the monthlies could be lower with a mortgage...tax incentives for other borrowers to outbid FTBS see to that...a tax subsidy making rents higher.

Yes, if you commit your 10% cash to buying a house and you have a job in high paid or public service...yes you can get a good rate for a mortgage.

What they dont paint a picture of is the situation today....a falling market where the first thing to go is YOUR cash committment (1 years 5% fall wipes out 50% of YOUR 10% commitment).

I agree, there are periods where buying could be cheaper than renting...In a free market, this would NEVER be the case.

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I think it's cheaper to buy on cheaper houses (around £120,000 ) but on more expensive houses you are better off renting.

Edited by gf3

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Yes, if you commit your 10% cash to buying a house and you have a job in high paid or public service...yes you can get a good rate for a mortgage.

What they dont paint a picture of is the situation today....a falling market where the first thing to go is YOUR cash committment (1 years 5% fall wipes out 50% of YOUR 10% commitment).

A very interesting statistic, and I am sure if I only had a 10% deposit, I would choose not to take that gamble.

But I bet most would be buyers ignore this probability.

Unfortunately I think renters will always be seen as some sort of 2nd class citizen in this country.

Most people I know (even people who are buying on IO mortgages) are baffled why we have chosen to rent over buying.

However we are currently enjoying renting a lovely large family home, in a good area, that we could not (as yet) afford to buy.

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Boulger said that if you have a small deposit it's cheaper to rent and if you have a large deposit it's cheaper to buy.

Interesting, I have a 100% deposit and it's certainly cheaper for me to rent.

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