Today's Bricks & Mortar In The Times

[London-loser]

I'm surprised there has been no comment on the article in today's Bricks & Mortar section of The Times.

There is an article asking whether it is smarter to rent than buy in today's market:

Bricks & Mortar today

A sign of changing times perhaps?

[KerPlunk]

I'm surprised there has been no comment on the article in today's Bricks & Mortar section of The Times.

link was posted on this thread

http://www.housepricecrash.co.uk/forum/ind...showtopic=19266

[Time to raise the rents.]

The author of this article should be shot.

I love how they conveniently fail to point out that IO on their example property would be roughly £100 more that the stated £2,000 rent.

Saying that you can rent it for £2,000 a month or buy it for £4,000 on a repayment mortgage is not much different to saying that you could rent it for £2,000 or pay interest of £2,100 and save £1,900 in a seperate account.

Yes one is forced savings & the other isn't, but what is really wrong with that if someone can afford it?

All I'm saying is that they should be more honest in what they write. The owner will have something at the end, the tenant won't. Simple.

[bandylegs]

The author of this article should be shot.

I love how they conveniently fail to point out that IO on their example property would be roughly £100 more that the stated £2,000 rent.

Saying that you can rent it for £2,000 a month or buy it for £4,000 on a repayment mortgage is not much different to saying that you could rent it for £2,000 or pay interest of £2,100 and save £1,900 in a seperate account.

Yes one is forced savings & the other isn't, but what is really wrong with that if someone can afford it?

All I'm saying is that they should be more honest in what they write. The owner will have something at the end, the tenant won't. Simple.

Yep; it's a killer when those VI's spin a story isn't it.

[jellybean]

All I'm saying is that they should be more honest in what they write. The owner will have something at the end, the tenant won't. Simple.

Cash and hair?

[stillill]

Aside from the maths,

those flats in "Primrose Hill" (that's a stretch - they're nearer Camden) are at a very busy junction/traffic lights/pelican crossing, just round from the top of Camden Parkway/Delancy/Gloucester Crescent. Nearish to Regents Park admittedly.

if anyone cares

They overlook and are on top of a railway line, are at a set of traffic lights (the photo's taken from a traffic island in the middle of the junction),beside what (if I remember correctly) is an obtrusive blue hire shop warehouse and their floor to ceiling windows ensure minimum privacy at all times from all sides.

£415000?

Edited November 18, 2005 by stillill

[Randall Herbert]

All I'm saying is that they should be more honest in what they write. The owner will have something at the end, the tenant won't. Simple.

Your almost right for once TTRTR very simple. Let me clarify what you really meant:

A person renting today will have a whopping sum of cash in the bank after ten years renting, to do with what they like. Probably afford a new car, holidays and have a life, even use it for a deposit on the now affordable houses available.

A person buying today however, will have a whopping debt to the bank and an 'asset' worth considerably less than they paid for it , less than four years down the track. They may even have a loan worth more than their property is then (negative equity). They are likely to be unable to enjoy a normal life, be shackled with debt and have little disposable income.

If they bought a property when house prices were at the correct long term affordable level, to which they are returning all over the country rapidly, then you may have a point, otherwise ususal TTRTR nonsense.

Its you who should be shot for offering more of the same old Bullish advice to try an prop up your personal BTL portfolio. Not working though is it?

Edited November 18, 2005 by Randall Herbert

[Time to raise the rents.]

How many tenants do you know who would actually save the money RH?

And what options do they have to beat the CG offered by the property in the future.

Consider that in the 1st month they have the chance to put £2,000 into a bank account. The property owner has the chance to pay £1,900 into their mortgage as a repayment.

At the end of that month, using interest rates (say 5%) and long term (say 7.5%) capital gains on property, the tenant will have £8.33 in interest added to their £2,000 and the owner will have £3,125 in capital gains added to their £1,900 repayment.

Now, are you sure you want to believe that prices are on the edge of a cliff & are therefore willing to accept the £8.33 reward? Or will you go for the chance at the £3,125??

[Goat]

How many tenants do you know who would actually save the money RH?

Apart from those on this site?

[Mildura]

A person buying today however, will have a whopping debt to the bank and an 'asset' worth considerably less than they paid for it , less than four years down the track.

Whilst this is a possibility, it's stretching it slightly to present this scenario as a certainty.

[Time to raise the rents.]

Apart from those on this site?

No, including those on thise site.

Whilst this is a possibility, it's stretching it slightly to present this scenario as a certainty.

You are right, the £8.33 was before tax. The £3,125 wasn't presented as a certainty. But I expect you got the point by the remarkable difference between the two numbers.

[Flash]

The author of this article should be shot.

I love how they conveniently fail to point out that IO on their example property would be roughly £100 more that the stated £2,000 rent.

I thought they chose quite a conservative example. There are some out there where the monthly difference on an IO mortgage and rent is much more than 5% (£100 in the example).

In fact, I live in one and pay just 60% of the equivalent IR mortgage on the property. The return on the funds that I didn't want to tie up in property has effectively reduced this to 30%.

And they tell me that renting is dead money. What is interest then?

This is so common-sense, it is becoming boring.

[London-loser]

How many tenants do you know who would actually save the money RH?

And what options do they have to beat the CG offered by the property in the future.

Consider that in the 1st month they have the chance to put £2,000 into a bank account. The property owner has the chance to pay £1,900 into their mortgage as a repayment.

At the end of that month, using interest rates (say 5%) and long term (say 7.5%) capital gains on property, the tenant will have £8.33 in interest added to their £2,000 and the owner will have £3,125 in capital gains added to their £1,900 repayment.

Now, are you sure you want to believe that prices are on the edge of a cliff & are therefore willing to accept the £8.33 reward? Or will you go for the chance at the £3,125??

Hi TTRTR,

I'd agree that there are things to question in this article - aren't there in pretty much all articles on the property market?

I was just a little surprised to see this type of piece in the Bricks & Mortar supplement - a pull-out, remember, that makes its money from adverts about new £1.25m properties in Esher or whatever. Certainly I remember when I first came to this site this supplement (then edited by Anne Spackman) got a panning weekly for its unreservedly bullish view on property.

I certainly know one tenant who saves/invests the money!

As for the rest of your post, this depends whether you believe in 7.5% capital growth for here. Change it for -5% and things look VERY ugly very quickly.

I'd agree that generally speaking property is a good long-term investment. I just don't think it is now a better bet than renting. It seems someone over at The Times is starting to agree.

[Time to raise the rents.]

Hi TTRTR,

I'd agree that there are things to question in this article - aren't there in pretty much all articles on the property market?

I was just a little surprised to see this type of piece in the Bricks & Mortar supplement - a pull-out, remember, that makes its money from adverts about new £1.25m properties in Esher or whatever. Certainly I remember when I first came to this site this supplement (then edited by Anne Spackman) got a panning weekly for its unreservedly bullish view on property.

I certainly know one tenant who saves/invests the money!

As for the rest of your post, this depends whether you believe in 7.5% capital growth for here. Change it for -5% and things look VERY ugly very quickly.

I'd agree that generally speaking property is a good long-term investment. I just don't think it is now a better bet than renting. It seems someone over at The Times is starting to agree.

Well I do think owning is better than renting. When renting in the UK costs substantially less (say 40%+) than buying (IO vs. rent) then as I've said before, I'll join the bear camp. Until then, I believe that CG is on the cards.

And lets not forget in the papers defence that they also sell advertising space for rentals and that agents also make money off rentals.

[London-loser]

Well I do think owning is better than renting. When renting in the UK costs substantially less (say 40%+) than buying (IO vs. rent) then as I've said before, I'll join the bear camp. Until then, I believe that CG is on the cards.

And lets not forget in the papers defence that they also sell advertising space for rentals and that agents also make money off rentals.

I wouldn't disagree with the idea that owning is better than renting (generally speaking).

For me renting is ONLY 25-30% cheaper than owning my property (depending on what the selling price actually is today). We'll have to agree to disagree, as ever, on where the tipping point is... only time will tell.

As for the paper and rentals, I'm not sure it make MUCH advertising off rentals (I suspect big glitzy colour spreads of executive homes in Esher are more profitable than little boxes advertising a two-bedder in Golders Green).

[lowrentyieldmakessense(honest!)]

Well I do think owning is better than renting. When renting in the UK costs substantially less (say 40%+) than buying (IO vs. rent) then as I've said before, I'll join the bear camp. Until then, I believe that CG is on the cards.

Anectdotal

currently paying £700 per month rent. Property realistically worth 260-280k. If 260k on interest only at 5% is £1083.33 per month. discount of renting to buying 35.4% add on other costs of ownership would surely give you your 40% discount. Bring your tent.

PS only reason i am renting is because we are currently doing a house up that we have bought. If it was purely for financial reasons I would not buy at the moment as it so much cheaper to rent (this will eventually change unless it really is different this time). The reason we have bought is because I don't like living somewhere that i don't own (young family etc), this is just how i am.

[othello]

I'm surprised there has been no comment on the article in today's Bricks & Mortar section of The Times.

There is an article asking whether it is smarter to rent than buy in today's market:

Bricks & Mortar today

A sign of changing times perhaps?

I'm renting after selling out 18 months ago (due to divorce rather than anything else) and have never been happier. My rent is far lower than the equivalent mortgage and I am enjoying watching the market slowly deflate. I will buy whewn prices are 30% less than their peak. I reckon they are already down 10%

[since the beginning]

No, including those on thise site.

You are right, the £8.33 was before tax. The £3,125 wasn't presented as a certainty. But I expect you got the point by the remarkable difference between the two numbers.

I agree with you on that point TTRTR very few people will be putting £1000 plus away a month I for one am not. However I think this all plugs back into the affordability issue very few people will also have the option of paying £4000 rather than £2000. The only decision these days for alot of potential FTB is IO or rent getting a repayment mortgage is out of the question.

[MarkG]

The owner will have something at the end, the tenant won't.

Owners will. Tenants renting from the bank with an interest-only mortgage will too: a big debt to pay off to buy the house. The one single sole only benefit of an interest-only mortgage is that you'll get a tax free sum if house prices increase and if you sell the house.... but you'll take a big loss that you'll have to make up with taxed income if prices drop.

Personally I'm paying 500 pounds a month to rent a log cabin in a rich area three minutes drive from where I work, away from the local chavs, in the grounds of a big house with a hundred yard driveway, CCTV, and people to fix any problems for free, all bills included (even the phone, provided I don't abuse it). A two-bed terrace in the same area would probably cost 250-300k, then I'd have to buy the fridge, TV and all the other junk, pay bills, council tax and maintenance on top of the mortgage, and I wouldn't be able to play DVDs at 2 in the morning with my 7.1 sound system turned way up without annoying the neighbours.

Yep, as a tenant I'm really hard-done-by. I feel really bad every time I check my savings account and discover there's 5k more in there than I thought I had after shoveling all my spare cash into it for a few months... I so wish I was paying the bank 1200 a month in rent on a depreciating asset instead.

[Michael]

Anectdotal

currently paying £700 per month rent. Property realistically worth 260-280k. If 260k on interest only at 5% is £1083.33 per month. discount of renting to buying 35.4% add on other costs of ownership would surely give you your 40% discount. Bring your tent.

PS only reason i am renting is because we are currently doing a house up that we have bought. If it was purely for financial reasons I would not buy at the moment as it so much cheaper to rent (this will eventually change unless it really is different this time). The reason we have bought is because I don't like living somewhere that i don't own (young family etc), this is just how i am.

your figures add up but only in certain markets can you rent a £260k property for as little as £700 a month.....

(yield to landlord of 3.23%)..........The only person i know renting like this is in a 3 bed detached house in rural Nottinghamshire...........and even there smaller properties yield 5%

[lowrentyieldmakessense(honest!)]

your figures add up but only in certain markets can you rent a £260k property for as little as £700 a month.....

(yield to landlord of 3.23%)..........The only person i know renting like this is in a 3 bed detached house in rural Nottinghamshire...........and even there smaller properties yield 5%

thats what is happening

not in a rural area in a yorkshire town close to motorways etc - maybe there is more of a bubble where i am - buy to let just doesn't stack up in this area at the moment - i know - i've done it.

Edited November 18, 2005 by lowrentyieldmakessense(honest!)

[MarkG]

your figures add up but only in certain markets can you rent a £260k property for as little as £700 a month.....(yield to landlord of 3.23%).

When I was looking around before moving, there were plenty of two-bed 300k 'executive flags' for rent for under a thousand a month. Sure, there were others on offer for 1500 a month to cover the BTL's interest-only mortgage, but I never saw one of them actually rented out for that price.

[Randall Herbert]

TTRTR

On balance the anecdotals would appear to have shot your arguments below the water line (again)

In a similar way the housing market has been.

Its sinking

And nothing you say can keep it afloat!!!

[Key Worker]

No, including those on thise site.

You are right, the £8.33 was before tax. The £3,125 wasn't presented as a certainty. But I expect you got the point by the remarkable difference between the two numbers.

The gearing works up and down.

[Randall Herbert]

Worth another read for all TTRTR?