Scott

Answer To 'should I Buy Now Or Rent' Questions

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Rent or buy? I tend to agree with those who conclude that, as things stand and in general, with all things considered, there probably isn't much in it. I do believe there will be a fall in values in the long term though. The monetary fiddling of the BoE scum has reached the end of the alley.

The economy continues to be screwed. It is increasingly apparent amongst policy makers and commentators that a massive house building exercise is needed. It will provide large numbers of jobs (helping the economy where money printing and artificial rates have failed) and address increasing stress and resentment amongst the hoards of under 35s who are taking the brunt of crap quality and high rent accommodation. Plus, it will make the economy more sustainable in the long run by reducing the need for high levels or personal debt, and will free up disposable incomes. Even if the current or the next government dont have the long term vision and sense to implement this, it will happen at some point in the next 20 years. Don't forget, the baby boomers won't be running this country forever. A big increase in supply, if it doesn't come soon, will come later as a massive backlash.

This must be factored into the calculations when considering the long term benefits of buying. Increased supply will place downward pressure on prices. It only takes a decision by policy makers to push the button. It will only take minor tweaks to planning regs and government funding to make this happen. Contrary to popular stupidity and lies, we are not an over developed island. Only around 4% of our landmass is built on. There is plenty of room for massive new urban extensions and even new settlements.

It's not if; it's when.

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Very interesting calculations, although I do think the choices should involve properties of similar value. A house worth £280k would cost much more than £900 per month to rent.

I am renting and have been considering getting on the property ladder of late. I have savings of about 35k and pay rent of about £10k/year, so I need to earn about 30% on my savings to reclaim this "dead money". I don't mind taking on heavy levels of risk so it isn't impossible to get a good return, although it is still very difficult of course.

The alternative is to buy something cheap for about £100k. I can see the costs around the transaction to be in the region of £3k, interest costs on top of that to be say £3k (depending on the specifics of mortgage of course), and also the many hours it would cost to re-organise my life. Since I might not stay in the UK for longer than another year or two, buying something seems like the wrong decision. It could take 6 months or longer to sell the property, costing me again a great number of hours and energy, and the outlook for house prices is not terrific over this timeframe.

Peter Schiff has said some excellent things about renting versus buying. There is nothing wrong with treating your rent payment like your grocery bill - just another cost of living. Buying a house is something you should probably do only when you know you would like to live in the property for many years.

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