Better To Buy Than Rent ?

[StuffIT]

TBH, if maintaining money wealth is not your bag, then buying your house a good idea...regardless of the ups and downs on the market.

Its always best to reduce your overhead where you can.

If the buy or not to buy decision involves a large loan, over 3 times salary, then I would certainly be more cautious.

If I won the lottery, Id buy. And Houses dont excite me any more. I live in a 400K house with huge garden and double gravel drive. Everybody loves it. costs me little.

to spend our fund and live in the above small semi with no garage on chavstreet just doesnt appeal.

If I was still in employment then I would not consider buying at present even with interest rates so low.

Its the 'how long is a piece of string' argument that I mentally battle with, when will that job offer happen, when will your income improve etc etc. It could be that I am trying to get some control of the current situation.

I dont want any of my posts to appear that I am urging people to buy, as tbh its the complete opposite of what I would do if I was still in employment.

[Si1]

yes definitely buy now so I can laugh at you

comparing home owning with cash - fool. try the markets. double fool. fool fool fool

hahahahahahahahahahahahahahahahahahahahahahahahahahahaha

[Darkman]

It's fairly straightforward to make 100 quid a day on the net using your fund if you're not working.

Investigate.

Be wary, lots of scams.

It's very boring though, a job is better.

Do tell.

[StuffIT]

I covered this a few months back.

Few people on here want to accept the fact that it can be a good time to buy even while prices are falling, if the falls are slow enough and you're buying with cash.

The two influencing factors are interest rates and the fact that you must live somewhere at all times(and therefore housing costs are never zero).

Assuming all STR fund cash is for a house and therefore not subject to inflation/deflation other than house prices. Monthly housing costs are either :

1. If renting - Rent minus interest income from STR fund minus depreciation in value of target house.

2. If owning - Depreciation in value(until market bottom) plus maintenance plus interest/capital payment(if mortgage required)

With interest rates so low and prices falling slowly or even rising sometimes, the total of 2 can easily be less than the total of 1 for cash-rich buyers.

FOR NOW.

If financial austerity is introduced and interest rates rise, total of 2 will be higher than total of 1, and house prices will fall faster.

If QE is continued, the IMF don't enforce austerity and rates remain low, then total of 1 will be higher than 2, and house prices will stabilise or even rise.

So in essence, buying now is a gamble that Browns policies can be continued for a long period.

Spot on.

Everyones situtation is different and none of us know what will happen tomorrow nevermind in 1 -> 2 years time, so we must make the decisions that we believe are right for ourselves at that time.

Its a shame that not everyone sees it that way and thats what I think is still one of major UK problems. A lot of people view property purely as something you either 'win' or 'lose' on rather than a secure roof over your head. When property comes back to realistic levels hopefull the 'house as a home' sentiment will return.

As I also 'STR'd I would hopefully be less hit by a further drop if I was to get something 20 -> 30% off peak levels.

[Moley]

That provides a basic living (with the odd perk) with no contingency or money to put away. But a wage of cica 20k would then provide those sums.

As I say theres no 'yes or no' answer to this one, I was just interested to get other peoples input.

£20k gives you a monthly takehome of £1,310.35

[Si1]

Everyones situtation is different and none of us know what will happen tomorrow nevermind in 1 -> 2 years time, so we must make the decisions that we believe are right for ourselves at that time.

eh? are you saying that by verbalising this obvious fact, somehow it's a good idea to by a house.

"I say I say I say, because today is now and I fancy it I'll buy a house"

excellent.

[The Ayatollah Buggeri]

And the case for buying is a reasonable one, based on our tax-and-benefits system that rewards homeowners and penalises savers. The big drawback is that it makes it much harder to move, if the Right Job comes up somewhere that's not local to the current home.

Agreed entirely. I currently have just over £70k in savings, and am saving about £1k a month. The current place I rent is a bit small and an hour's commute from work, but rent is about 60% of the going rate of pretty much anywhere else located such that I'd make a substantial saving in time or money on commuting costs (my flat is in a listed building and I rent it from The National Trust, and so there are several contractual conditions attached that drive the rent down). While the lack of space is proving a bit limiting for me now, I'm happy to wait another 6-12 months before buying: assuming prices don't actually rise in that time, by this time next year I reckon I'll be in a position to buy a small house in a reasonable area of Leeds outright.

However, if I were to be at any risk of losing my job between now and then, I'd try to buy instantly (putting more or less every last penny into the deposit), because were I to be unemployed and still a tenant, I'd be expected to fritter those savings away on rent before receiving any help from the taxpayer. But if I'm an OO struggling with the mortgage through unemployment, state help is available.

Even if further house price falls are to come, I suspect that in your position buying is the most sensible thing to do.

[shindigger]

...Strange then that you're a newbie to this site. why would you make such a huge financial ump like selling your house, and renting for a few years, and not even pop your head into this site, gain the knowledge of the posters that were around at that time?

I call "bear turning bull" troll.

Sorry if you're not, but you'll have to try a little harder to convince people that you're not just another labour stooge spreading the good word about the mirage that is the recovery, and that everybody should just jump back into property and 'fill their boots'.

for example, you say that you'd be "better off" by putting your money into property because you're not getting any interest. Come on, you surely have enough intelligence to realise the fallacy of that statement, if the asset your buying is a depreciating asset?

Renting, yes you're paying a landlord for the priveledge, but this is just the equivalent of buying a property at an over inflated price. you're then lining the pockets of the (previous) property owner.

A poor, poor effort at trolling, trying to imply the best thing people can do with their money is store it in bricks and mortar.

It is perfectly possible to be bearish withour ever having heard of this website you know.

I was a bear, STR 2001 but didnt realise this site existed until i googled "icesave trouble" and stumbled across the place.

Ive chosen to get my financial news from here ever since mind.

[Si1]

However, if I were to be at any risk of losing my job between now and then, I'd try to buy instantly (putting more or less every last penny into the deposit), because were I to be unemployed and still a tenant, I'd be expected to fritter those savings away on rent before receiving any help from the taxpayer. But if I'm an OO struggling with the mortgage through unemployment, state help is available.

interesting - linkys or details?

(also, savings in your pension fund are not counted towards benefits-means-testing, btw)

[Lepista]

Thankyou - yes I joined in 2006

The loss of flexibility is an issue and thats what keeps me renting at present.

However if I own outright then ive always a 'bolt hole' as it where with minium bills to pay if I need to get digs elsewhere. Ive moved quite a bit for work but that in itself causes problems, and as I get older I think a 'base' is not a bad option to have.

TBH as a single bloke with cash in the bank, I know that Gordo and his chums and any other govt would sacrifice me first before anyone else and maybe im just after a bit of 'security' as I mentioned previously.

*ahem* oops. My wholehearted apologies. I really should look before I leap.

You live in a really strange/paranoid world.

Not really, there are a lot of "newbies" (real ones, not ones I've invented in my head) coming onto this site, telling their tales of how they are fed up of the interest rates, so the only thing left for them to do is to go and spend all their hard earned cash thats lying around on a house.

[Darkman]

It's fairly straightforward to make 100 quid a day on the net using your fund if you're not working.

Investigate.

Be wary, lots of scams.

It's very boring though, a job is better.

Yes?

[swissy_fit]

Do tell.

I'm sure there are dozens of ways of making cash on the net.

For what I was doing you need to be numerate, fast, accurate, inventive, have 40k, be mentally resilient, and not mind being a parasite. Not dissimilar to being a banker in fact.

I'm much happier working, even in IT.

[GluePeter]

I think buying now can make sense, depending on your situation. I am about to buy a 3 bed house in West London for 410k - with 260k STR fund.

So, I'll have a 150k mortgage - and I reckon prices might drop another 10-20% from here, over two years or so. So, by waiting I might got that house for somewhere around 350 - but will have paid 40k in rent over two years. So, will only be 20k better off by waiting for two years. Doesn't seem worth it - found a great house time to get on with making a home of it.

I timed the top perfectly - STRed in September 2007. If you can get within 10% of top or bottom you have done well I reckon...

[Si1]

So, I'll have a 150k mortgage - and I reckon prices might drop another 10-20% from here, over two years or so. So, by waiting I might got that house for somewhere around 350 - but will have paid 40k in rent over two years. So, will only be 20k better off by waiting for two years.

your capital opportunity and mortgage interest will come to a similar 40k rent figure, so this calculation appears spurious.

Edited August 25, 2009 by Si1

[Spoony]

How can you claim JSA with £140K in the bank? I thought that was means tested? No?

I am worried I am going to lose my job and I too need to spend my savings on a house if I am going to be able to claim anything from Gordon (eg be like all the other wasters) So I can see your point. I am in a similar dilemma.

[Laughing Gnome]

Unfortunately the only sensible thing to do is buy now in your circumstances.

The alternative is to disqualify yourself from all benefits whilst spending down your fund to make some parasite landlord rich. A forced decision, but at least you are fortunate enoughto have the option.

[VeryMeanReversion]

Unfortunately the only sensible thing to do is buy now in your circumstances.

The alternative is to disqualify yourself from all benefits whilst spending down your fund to make some parasite landlord rich. A forced decision, but at least you are fortunate enoughto have the option.

That's a good summary.

As long as you can buy mortgage free, it's worth doing. Rent a room to pay for bills and maintenance and play the benefits system for all its worth. I think that would outweigh another 20% loss in house prices.

Sad but true.

VMR.

P.S. you lodger needs to be a student or DSS to avoid becoming liable for the 75% council tax bill.

P.P.S make sure you will be able to get a job in this area when the recovery comes or you will be stuck there for a lifetime

[Lepista]

Not really, there are a lot of "newbies" (real ones, not ones I've invented in my head) coming onto this site, telling their tales of how they are fed up of the interest rates, so the only thing left for them to do is to go and spend all their hard earned cash thats lying around on a house.

Like this one:

This is a very interesting thread, just looking through some figures now, and yeah, based on local evidence it doesn't seem like there's any signs of a HPC coming here, in fact it actually seems to have stabilised!

I currently live with my parents but am considering buying a house, I know there are countless fantastic resources scattered over this site and the forum, but is there one piece of reading anyone would recommend that could help me reconsider my decision?

Thanks

[Guest happy?]

Like this one:

I still think that's a harsh viewpoint - i.e. if someone new says they're thinking of buying then they're a politically-motivated troll. There are veterans on here who've bought recently who would otherwise fit your category.

My viewpoint remains skeptical of the longterm effects of QE. QE in my view can mitigate against the immediate impact of the worst casino-banking in history, but house prices remain historicaly high - unsustainably so.

It's possible that house prices won't fall any further but that the market stagnates for several years and inflation erodes the problem, that to me still seems over-optimistic as there any number of external events which will trigger further falls.

[Orbital]

If you want a house and can afford it, then buy one!

Anything else is just greed ! Oh wait it is only greed if you profit from the property market going up (evil BTL scum!), those who profit from it going down are just sensible (those saintly distressed sale buyers!). I don't see the difference myself !

[RodCrosby2]

I'm sure there are dozens of ways of making cash on the net.

For what I was doing you need to be numerate, fast, accurate, inventive, have 40k, be mentally resilient, and not mind being a parasite. Not dissimilar to being a banker in fact.

I'm much happier working, even in IT.

Aw, go on - gives us a clue.