Is Home Ownership Really Desirable?

[Fancypants]

The excellent (if sometimes a tad overwrought) Owen Hatherley in today's Guardian:

High levels of debt and stress encourage acceptance of low wages and long hours. There's a lot to be said for renting

Home ownership is beyond two thirds of potential first-time buyers, according to a survey.

"No man who owns his own home and lot can be a communist." So claimed William Levitt, the American property developer who created the American suburban landscape in the 1950s. Levitt built thousands of mass-produced, detached, identikit yet individualistic houses, made so cheaply as to be economically sold to lower middle- and even working-class buyers. Take away the second clause – The Good Life notwithstanding, suburban gardens have seldom been put to any useful purpose – and you have the rationale for the huge changes in housing in Britain over the last 30 years. Under Margaret Thatcher, John Major, Tony Blair and Gordon Brown, an attempt was made to create a "property-owning democracy", banishing the spectre of socialism in the process. But has David Cameron inadvertently started to break the pact?

This week's report by the Halifax on home ownership corroborates a fact obvious for some years now – that, as property becomes more and more expensive, especially in the south-east of England, a generation is growing up unable to buy a home. One of the UK's largest mortgage lenders reports that two thirds of "potential first-time buyers" have no prospect of taking out a mortgage, and partly because they lack the appropriate thriftiness. Aside from this blaming of the victim – given that real wages are either stagnant or falling, and have been for decades, it's in poor taste to moralise about credit – it clearly believes that home ownership is a good and desirable thing. Is it?

In the 1970s, many saw the property-owning democracy on the horizon, and considered it a dangerous, albeit refined, piece of bribery. In his classic Working for Ford, sociologist Huw Beynon found that many trade union activists at the Ford plant in Halewood, Merseyside, refused to take out mortgages or buy houses. He quotes one shop steward as saying: "[The workers] get made up, earn a lot more money and then the company starts encouraging them to buy a house, to get a car on the company's scheme. I know this for a fact. Then when they're up to their neck in debt they put the screws on them, and they've got no chance. A shop steward should never be in that position, where he can't afford to go on strike pay. I'd never buy a house when I was a shop steward. I don't think any steward should."

Then, the Ford Motor Company's own mortgage schemes were a front in a class war; since 1979, it has been official policy, with the introduction of the Right to Buy council housing combining with a refusal to build any new council housing stock. Together, they decimated secure, comfortable rented accommodation. If this was a trick, as the Halewood stewards suspected, then most of us fell for it. Today, crippling levels of household debt, repossession and housing-related stress coincide with low wages, long hours, and extraordinarily few strikes. It's hardly a coincidence. A housing crisis, with millions in insecure or overpriced housing, doesn't necessarily lead to anger, to a demand for something better – it leads to fear, anxiety that even the Barratt Homes rabbit hutch you've acquired could be easily lost.

The UK's preponderance of home ownership is matched only by the poverty of its homes. The most expensive in Europe, they are also the most dilapidated when old, the smallest when new. And yet, from the London county council's arts and crafts estates of the 1890s to the Trellick Tower in the 1970s, we once had some of the world's finest low-cost rented housing. It was not owned by us as individuals, struggling to meet the instalments – it was owned by us collectively, as a public good. Rather than wishing cheap mortgages back, we need to be thinking outside of our own homes and lots.

[guitarman001]

This was the most telling part of it for me:

'The UK's preponderance of home ownership is matched only by the poverty of its homes. The most expensive in Europe, they are also the most dilapidated when old, the smallest when new.'

I don't know if I'd WANT to buy here, ever!

[wherebee]

You know, I have been thinking in recent weeks that the fact I have no mortgage and no millstone, renting through choice, means I am much freer to refuse to kowtow to everything an employer might try to force me to do. We'll never know how much negative behaviour in the workplace (i.e. selling crap no one needs) is made possible through debt slavery......

[thecrashingisles]

This was the most telling part of it for me:

'The UK's preponderance of home ownership is matched only by the poverty of its homes. The most expensive in Europe, they are also the most dilapidated when old, the smallest when new.'

I don't know if I'd WANT to buy here, ever!

Although he ruined it in the next sentence by citing the Trellick Tower as an example of "some of the world's finest low-cost rented housing".

[The Masked Tulip]

Is that that awful and depressing looking building you see as you pull into Paddington station?

[TheCountOfNowhere]

Although he ruined it in the next sentence by citing the Trellick Tower as an example of "some of the world's finest low-cost rented housing".

Nice....what are they renting at 2K a month ?

[thecrashingisles]

Is that that awful and depressing looking building you see as you pull into Paddington station?

That's the one.

[too soon to buy?]

I would rather own my own home.

I know that prices are crazy and, for the same money pcm, you can rent a much nicer house than the one you could afford through mortgage, there is a very different feeling you get from sitting in your "own" home and one you "rent."

Take my parents for example, they dilligently spent their working life paying the bills etc (including the mortgage), but now one of them has retired, they have paid off the mortgage and their outgoings are just the gas bill and council tax. They can relax and enjoy their retirement, knowing the job is done.

mortgage vs rent. I like the satisfaction that the mortgage will be one day paid and each month takes you a step closer, whereas with rent, someone else is directly getting richer every month you make a payment. Add in the fact we have been absolutley stuffed in the past by landlords chasing an extra buck, we'd much rather have the stability (appropriately) mortgaged 'ownership' brings.

Just my view, aint saying it is the view everyone should have or share, but that's my take on the question

[Si1]

I would rather own my own home.

I know that prices are crazy and, for the same money pcm, you can rent a much nicer house than the one you could afford through mortgage, there is a very different feeling you get from sitting in your "own" home and one you "rent."

Take my parents for example, they dilligently spent their working life paying the bills etc (including the mortgage), but now one of them has retired, they have paid off the mortgage and their outgoings are just the gas bill and council tax. They can relax and enjoy their retirement, knowing the job is done.

mortgage vs rent. I like the satisfaction that the mortgage will be one day paid and each month takes you a step closer, whereas with rent, someone else is directly getting richer every month you make a payment. Add in the fact we have been absolutley stuffed in the past by landlords chasing an extra buck, we'd much rather have the stability (appropriately) mortgaged 'ownership' brings.

Just my view, aint saying it is the view everyone should have or share, but that's my take on the question

I'm sorry, but this post underlines your basic innumeracy, over priced houses mean landlords subsidise tennants, not the other way round

[blackgoose]

Owning your own home is much nicer

More stability

Dont have to deal with a pain in the ass LL

Can do whatever you want to it

I see that prices are too high, and most likely coming down slightly (though there is risk of inflation). However, I have accepted these financial losses by just paying up and buying in order not to deal with a scumlord BTL parasite.

[scottbeard]

I would rather own my own home.

I know that prices are crazy and, for the same money pcm, you can rent a much nicer house than the one you could afford through mortgage, there is a very different feeling you get from sitting in your "own" home and one you "rent."

Take my parents for example, they dilligently spent their working life paying the bills etc (including the mortgage), but now one of them has retired, they have paid off the mortgage and their outgoings are just the gas bill and council tax. They can relax and enjoy their retirement, knowing the job is done.

mortgage vs rent. I like the satisfaction that the mortgage will be one day paid and each month takes you a step closer, whereas with rent, someone else is directly getting richer every month you make a payment. Add in the fact we have been absolutley stuffed in the past by landlords chasing an extra buck, we'd much rather have the stability (appropriately) mortgaged 'ownership' brings.

Just my view, aint saying it is the view everyone should have or share, but that's my take on the question

Agree with you that it is desirable to own a house outright by the time you retire.

However, in a world of falling house prices, your landlord is getting POORER every month, whilst you wait for the right moment to buy. If you believe house prices are falling or will fall, renting can leave you quids in.

Renting can be a very sensible short to medium term option. But I wouldn't want to do it long term (>10 years, say).

[mfp123]

more the case owning your own nice home is nicer...

if it a crap property wheres the joy in owning it. it becomes a millstone , youll think jeez i own this property

[scottbeard]

Owning your own home is much nicer

More stability

Dont have to deal with a pain in the ass LL

Can do whatever you want to it

I see that prices are too high, and most likely coming down slightly (though there is risk of inflation). However, I have accepted these financial losses by just paying up and buying in order not to deal with a scumlord BTL parasite.

My landlord and letting agency are really good, which is what makes renting such a pleasure. I hated owning my own house back in 2008 and watching the value of it sink every month.

Right now I am happier renting. But I am watching very carefully for when it is the time to buy again.

[Si1]

Agree with you that it is desirable to own a house outright by the time you retire.

why?

isn't it simply easy to buy one for cash using your lifetime investments you saved from not paying over the odds for a house?

[scottbeard]

why?

isn't it simply easy to buy one for cash using your lifetime investments you saved from not paying over the odds for a house?

Yes, that works - that's one way to get the house outright by retirement.

But I don't think I need leave it 30 years before the time is right to buy though - I'm pretty sure sometime in the next 2-5 years will be the right time because houses won't be over the odds then.

[winkie]

more the case owning your own nice home is nicer...

if it a crap property wheres the joy in owning it. it becomes a millstone , youll think jeez i own this property

.....can't be nice owning something nobody would want or desire to live in.

[Wait & See]

IMO home ownership is desirable if you can buy your property in cash. The bit that most don't want is the mortgage bit.

In case you don't already know, If you buy a house for 200k and have a 25/30 year mortgage on the place at £1,200 per month, you will pay back double what the property was sold to you for.

If you rent the same type of property for 60 years at £600-£800 per month, the sums would work out about the same.

Buy a house in cash = good.

Buy a house with a mortgage = bad.

Edited May 31, 2011 by Wait & See

[TheCountOfNowhere]

Isn't it better just to get someone else to pay for your housing till the day you die ?

Welcome to labours Britain.

[Si1]

IMO home ownership is desirable if you can buy your property in cash. The bit that most don't want is the mortgage bit.

In case you don't already know, If you buy a house for 200k and have a 25/30 year mortgage on the place at £1,200 per month you will pay back double what the property was sold to you for.

If you rent the same type of property for 60 years at £600-£800 per month, the sums would work out about the same.

Buy a house in cash = good.

Buy a house with a mortgage = bad.

+1

[Wait & See]

The sums would work out about the same, also adding that you would have no repairs to do either.

[worried1]

I still think that it is still desirable overall, but this has been overstated by what has happened in recent years.

It is still nice to think that by buying a place and paying the mortgage over 25 years you won't have to pay rent in retirement, and that you will have an asset to pass on to children or pay for care home fees. It is also nice not to have to deal with a landlord all the time.

On the other side of the coin, owning a house really reduces your social and economic mobility, especially when prices are all over the place.

Over the last 30 years, home ownership has been seen as a free income because prices have gone up so much. Even straight after the 1990s crash, the overall view still seemed to be that prices can only go up. Parents have been even more insistent that their offspring should get 'on the ladder' as soon as possible so that they don't miss out on the opportunity that they had. The problem is that the opportunity available now is to break-even at best on a house purchase, which is as it should be!

If regulated tenancy agreements were bought back, it would be an advantage to rent, but under ASTs it does leave too much uncertainty.

[Si1]

It is still nice to think that by buying a place and paying the mortgage over 25 years you won't have to pay rent in retirement, and that you will have an asset to pass on to children or pay for care home fees. It is also nice not to have to deal with a landlord all the time.

nice but untrue

[mfp123]

.....can't be nice owning something nobody would want or desire to live in.

some apartments in those council estate tower blocks can go for well over half a million in certain areas of london.

imagine having that around your neck, paying over the odds to live in a run down council block for the next 25 years.

[Wait & See]

Here's a wee sum -

Buy a property for 200k and get a capital repayment mortgage paying £1,200 per month for 25 years or 300 months = £360k

Rent the same property for £700 per month over 50 years or 600 months = £420k

Lets add on say 50k to the buying figure for new kitchens/bathrooms/ conservatories/hardwood floors etc and we get

Buying = £410k over 25 years.

Renting = £420k over 50 years.

Just a rough calculation. I take the point about security though. Buying is better until tennents have proper rights.

[19 year mortgage 8itch]

I'd like to own again but I had to sell and rent so that I had the deposit and the good positioning to buy when the time is right. Sticking put because "owning is better than renting" could have left me stuck where I was for an exceedingly long time.