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Layman

Advice From Ea - Buying Is Better Than Renting

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I don't expect this to generate a whole load of intellectual discussion... but it made me chuckle when this popped through our (rented) door yesterday...

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The lack of volume in sales must *really* be hurting.

Edited by Layman

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The fatuous 'life time' renting versus buying argument, do the think people are stupid........ :rolleyes:

He's an estate agent who has been creaming it for the last decade - he KNOWS people are stupid.

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Rents are higher because so many people are not in a position to buy due to a lack of deposit or unaffordable mortgage. This means that rental property is in more demand and landlords can get a higher rent.

Amazes me though that we have so many tenants paying such a high rent when it would be much cheaper to buy. The problem most tenants seem to have in my experience is that they rent a property that they can afford and live in the best property available to them.

If they looked at it in a different way, then they would look for a smaller or less attractive property with a much lower rent. This would allow them to save a lot more money which would give them a bigger deposit.

If or when prices come down further and the economy is in a better state, then they would be in a very strong position to buy fairly cheap, pay a big deposit and have a smaller mortgage.

Ah, just read the full artice and he does state why rents are going up, but he talks a bit of guff about tenants losing out in the long run should they buy. In my opinion of course :D

I would agree that prices always go up at some stage in the future, but that is obvious. If you buy for the long term, then you should never lose out. The only home owners that lose out are the ones that borrow money on the property when banks are throwing money at them, those whose circumstances change through job loss or relationship breakdowns or those that listen to poor advice and buy at the wrong time.

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Rents are higher because so many people are not in a position to buy due to a lack of deposit or unaffordable mortgage. This means that rental property is in more demand and landlords can get a higher rent.

Amazes me though that we have so many tenants paying such a high rent when it would be much cheaper to buy. The problem most tenants seem to have in my experience is that they rent a property that they can afford and live in the best property available to them.

If they looked at it in a different way, then they would look for a smaller or less attractive property with a much lower rent. This would allow them to save a lot more money which would give them a bigger deposit.

If or when prices come down further and the economy is in a better state, then they would be in a very strong position to buy fairly cheap, pay a big deposit and have a smaller mortgage.

Ah, just read the full artice and he does state why rents are going up, but he talks a bit of guff about tenants losing out in the long run should they buy. In my opinion of course :D

I would agree that prices always go up at some stage in the future, but that is obvious. If you buy for the long term, then you should never lose out. The only home owners that lose out are the ones that borrow money on the property when banks are throwing money at them, those whose circumstances change through job loss or relationship breakdowns or those that listen to poor advice and buy at the wrong time.

Like now ;).

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The fatuous 'life time' renting versus buying argument, do the think people are stupid........ :rolleyes:

Indeed. I must remember to ask his advice on my next holiday - should I rent a hotel room for a couple of weeks or should I just buy the hotel? After all, two weeks rent is money down the drain isn't it :rolleyes:

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Like now ;).

Is now really the wrong time to buy?

Certainly in London if the figures I see are correct and they are even higher than the peak.

It kind of depends where in the UK you are.

Here in Swansea I would suggest it is the right time to buy if you can negotiate the right price. Most properties are still on the market due to the asking prices being OTT.

There are now quite a few properties coming on at what I would consider to be good prices. Sure prices may well fall and fall another 10% or so, but it depends on what you are buying for. If it is the long term and it is affordable, then buy. Certainly if it is cheaper than renting.

Buying a house is a huge deal and with the how the market is now people need to do lots of research to make sure they are getting a good deal. These are few and far between, but so are buyers :)

The main problem I would have now if I was buying is, do I hold out for longer to see how the prices go?

This may depend on circumstances, but for the next 3 or 4 years I don't see there being much change in prices. I think if you bought now, then the property will be worth the same in 5 years. So, do you just buy and get a fixed rate mortgage for that period and save money because it's cheaper than rent plus pay off most of the interest of the mortgage and a little equity or try to save more of a deposit and wait it out giving you a bigger deposit.

Either way in 5 years, you are likely to still owe the same amount for the property, but you could have a shorter term on the mortgage by buying now unless you can save a lot of money in the next 5 years to pay a much much bigger deposit.

Catch 22 perhaps, but life is generally like that.

It's hard to give advice because we all have our opinions, so there will always be somebody to disagree.

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If they looked at it in a different way, then they would look for a smaller or less attractive property with a much lower rent. This would allow them to save a lot more money which would give them a bigger deposit.

If or when prices come down further and the economy is in a better state, then they would be in a very strong position to buy fairly cheap, pay a big deposit and have a smaller mortgage.

I agree.

These comparisons usually seem to assume that you would rent the same type of house as you would buy. Most people I know would happily rent a small flat due to the low cost, but would never consider buying one as a family home.

My case is identical. My rent is £400 per month. If I rented the type of house I would actually be happy to buy, the mortgage would be about £1000 interest only.

That is cheaper in anyone's book, and the difference is my overpayment/deposit.

[Edit: week => Month!]

Edited by libspero

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Is now really the wrong time to buy?

Certainly in London if the figures I see are correct and they are even higher than the peak.

It kind of depends where in the UK you are.

Here in Swansea I would suggest it is the right time to buy if you can negotiate the right price. Most properties are still on the market due to the asking prices being OTT.

There are now quite a few properties coming on at what I would consider to be good prices. Sure prices may well fall and fall another 10% or so, but it depends on what you are buying for. If it is the long term and it is affordable, then buy. Certainly if it is cheaper than renting.

Buying a house is a huge deal and with the how the market is now people need to do lots of research to make sure they are getting a good deal. These are few and far between, but so are buyers :)

The main problem I would have now if I was buying is, do I hold out for longer to see how the prices go?

This may depend on circumstances, but for the next 3 or 4 years I don't see there being much change in prices. I think if you bought now, then the property will be worth the same in 5 years. So, do you just buy and get a fixed rate mortgage for that period and save money because it's cheaper than rent plus pay off most of the interest of the mortgage and a little equity or try to save more of a deposit and wait it out giving you a bigger deposit.

Either way in 5 years, you are likely to still owe the same amount for the property, but you could have a shorter term on the mortgage by buying now unless you can save a lot of money in the next 5 years to pay a much much bigger deposit.

Catch 22 perhaps, but life is generally like that.

It's hard to give advice because we all have our opinions, so there will always be somebody to disagree.

Actually, I'm a potential cash buyer and I receive more in interest on the £350K I'd have to draw out of the bank to buy the house I'm renting, than I pay out in rent. I don't have to pay for any maintenance or repairs and since I'm expecting house prices to fall 30% to 40% over the next few years I'd be mad to buy now ;).

The way I see it, we all have to pay to put a roof over our heads and there are three ways of doing it.....

1, Pay rent to a landlord.

2, Pay interest to a lender.

3, Pay cash and lose the bank interest that you would otherwise receive on the money that you tie up in a house.

It depends on the current market conditions as to which is best at any given time.

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  • 309 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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