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SarahBell

Rent Of Buy

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http://www.rightmove.co.uk/property-to-rent/property-30962380.html

5 bedroom property to rent

£1,550

pcm

York Road, Chorlton, Manchester

Ideal for a Family ? No sharers

or

http://www.rightmove.co.uk/property-for-sale/property-33152384.html

6 bedroom semi-detached house for sale

Offers in Region of

£550,000

York Road, Manchester, Greater Manchester

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550,000 x 4% cost of capital p.a. (which is very optimistic) = £1,833 per calendar month

550,000 x 0.5% maintenance p.a. average = £229 per calendar month

buiding insurance approx £100 a month

Stamp duty: £22,000

Cost of ownership over a 5 year period:

(1) renting: £93,000

(2) owning: £151,700

Owning is 62% more expensive over a 5 year period.

Which IDIOT will buy this at £550k ???

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Slightly misleading.

Rental:

For simplicities sake, say you start with 572,000

Rent: £1500 pcm

572k in savings earning ~3% = ~1100 pcm interest after basic rate tax

so rental place costing £400 a month out of your wage

Buying:

All 572k spent on house/stamp

cost per month:maintenance (your avg is slightly high ) + buildings = ~£250 out of your wage

= renting costing more by £150 per month. Obviously buying will become less attractive the larger mortgage is required, but you have not allowed for cash buyers (e.g. me!)

You can cut scenarios like this however you want to get the answer you want. Besides which the £1500 rental price is likely to be achieved whereas the 550k asking price is more likely to be 475-500 (no-one is going to cross the 500k threshol on a 550 asking in the current market, so that would increasingly favour the 'buy' option.

Besides which, you're taking no account of non-economic considerations. I don't know if you've children, but let me tell you that a landlord being able to give you 1-2 months notice, find a new place and move whilst potentially increasing travel times to nurseries/schools is no picnic.

I say this as someone who sold a couple of months ago and is now (after full consideration) renting at twice the cost of my old mortage.

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Slightly misleading.

Rental:

For simplicities sake, say you start with 572,000

Rent: £1500 pcm

572k in savings earning ~3% = ~1100 pcm interest after basic rate tax

so rental place costing £400 a month out of your wage

Buying:

All 572k spent on house/stamp

cost per month:maintenance (your avg is slightly high ) + buildings = ~£250 out of your wage

= renting costing more by £150 per month. Obviously buying will become less attractive the larger mortgage is required, but you have not allowed for cash buyers (e.g. me!)

You can cut scenarios like this however you want to get the answer you want. Besides which the £1500 rental price is likely to be achieved whereas the 550k asking price is more likely to be 475-500 (no-one is going to cross the 500k threshol on a 550 asking in the current market, so that would increasingly favour the 'buy' option.

Besides which, you're taking no account of non-economic considerations. I don't know if you've children, but let me tell you that a landlord being able to give you 1-2 months notice, find a new place and move whilst potentially increasing travel times to nurseries/schools is no picnic.

I say this as someone who sold a couple of months ago and is now (after full consideration) renting at twice the cost of my old mortage.

well the key difference is the cost of capital assumption really.

If you would like to lock up £572k cash in a house in manchester for many years at 3% return per annum be my guest. But it's a bad investment return wise compared to practically all other investments available over a longer period. even it the crisis shares are not doing badly (and dividends included a lot better than 3% p.a)

If you add a mortgage in the equation and something other than 0.5% base rates it makes it evident how much risk you are taking buying this (ie a small increase in interest rates puts the whole cost picture in the negative)

of course there are other factors and you need to determine the monetary value of those.

I would think this house is at least 20% overvalued on the numbers alone, which you seem to agree with.

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Is it denial that they can't get what they want for the house and so think renting it out will tide them through to house prices rising again?

As we all know house prices only ever go up. They are applying a faultless strategy!

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Is it denial that they can't get what they want for the house and so think renting it out will tide them through to house prices rising again?

I can't see how house prices could rise again in Chorlton without crazy lending practices returning, and even then since most things are optimisticly priced anyway right now, it would need to be really crazy lending practices for those to grow further.

I read the advert as "we want to punt this property asap and get as much money as possible right now, but we are not giving it away, we'll rent it instead, 1500 sound about right?"

Therefore delusional factor is high here, avoid at all costs.

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  • 277 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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