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Rent Costs £124 More A Month Than A Mortgage

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The cost of paying off a mortgage has never been lower due to rock-bottom interest rates. In 2008, a typical family spent £945 a month on a mortgage for a three-bedroom house and other buying costs such as insurance and maintenance. A family who were renting a similar property in the same area were spending only £719. As you would expect, the biggest gap between renters and owners is in London – where a mortgage for a typical three-bedroom house is £1,196 per month, while a tenant is spending £188 more.

The calculation is based on a typical family with a 27 per cent deposit on the property and a £126,000 mortgage. In England and Wales, the average house price has reached an all-time record of nearly £260,000, according to estate agent LSL Property Services – nearly ten times higher than the typical full-time worker’s salary of £27,000.

While mortgages are at their cheapest rates ever, the gap highlights the nightmare facing families who want to buy but cannot afford the huge deposits needed to get on to the property ladder in the first place. But the tide has turned against tenants over the past six years. The family who are renting are now paying a record high of £769 a month, and the family who own their home are spending only £645 a month on their mortgage. The situation has never been worse for tenants, as there is not a single region where a family who rents is better off than one who owns, according to the report compiled by banking giant Halifax. However, with the first increase widely expected to take place next spring, mortgage holders may not be better off than renters for long. Link

Then it's time to sell.

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insurance

decorating

breakdowns

fences down

trips to the garden centre

improvements

all the thing my neighbours do every week....all the things I used to do...but dont any more.

And when they stop doing all this?...the placed become overgrown, delapidated and lose value...and I have neighbours like this too...too old and frail to be able to cope...

Life isnt about a balance sheet.

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according to the report compiled by banking giant Halifax

Hairdresser advises everybody to get a haircut right now before they miss the boat.

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Then it's time to sell.

The calculation is based on a typical family with a 27 per cent deposit on the property and a £126,000 mortgage. In England and Wales, the average house price has reached an all-time record of nearly £260,000, according to estate agent LSL Property Services – nearly ten times higher than the typical full-time worker’s salary of £27,000.

It's early, relatively

27% deposit and £126,000 mortgage gives a value of ~ £172k - so not quite like buying in at £260k vs renting a £260k property

Or have I made a dunce of myself ?

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Hairdresser advises everybody to get a haircut right now before they miss the boat.

..but they are quite happy to lend to BTL. "Oh but Mr landlord we can't advance you a loan, no one will rent from you as it cheaper to buy!"

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It's early, relatively

27% deposit and £126,000 mortgage gives a value of ~ £172k - so not quite like buying in at £260k vs renting a £260k property

Or have I made a dunce of myself ?

dunce

that was what they paid 15 years ago.

they got a 10 times joint mortgage from the Northern Rock, and they have made not only £124 per month saving ( imputed rent) but they are millyonaires to boot...well, they would have been if pesky banks hadnt had a credit crunch.

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None of these rubbish articles have a basis in reality.

The rent vs buy calculators only make it "cheaper" for me to buy if we assume I never pay >3% interest on a 25 year mortgage... And all of these calculators assume that my savings (that I need to extinguish to buy...) would return 0%.

On the other hand I am so sick of landlords, their agents and the shoddy state of rental stock, I probably will buy (something small) some time next year.

You can never buy back more time.

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..but they are quite happy to lend to BTL. "Oh but Mr landlord we can't advance you a loan, no one will rent from you as it cheaper to buy!"

Good one.

Here's the source:

http://www.lloydsbankinggroup.com/globalassets/documents/media/press-releases/halifax/2014/140315-haifax-buying-vs-renting.pdf

The gap between the costs of owning and renting is being driven by average monthly rents increasing by over £100 since 2009, while average monthly ownership costs have remained relatively unchanged over the same period.
1Average buying costs:

Average buying costs include mortgage payments (weighted average of repayment and interest-only mortgage payments), household maintenance, repair, minor alterations and insurance costs. Mortgage payments refer to the average new borrower (including both first-time buyers and homemovers). Figures relate to the first year of purchase.

They also include a sum to take account of interest lost on the deposit.

Including IO mortgage payments is a slight of hand imo, no mention of a provision for an alternative repayment vehicle is mentioned. So a fraction (albeit unknown) of the 'buyer' costs are not buying at all, in the sense the press release means to convey.

Strange though, place I rent would cost about 20% more than the study's £172k, yet the rent we pay is under the £769 quoted. maybe I made a mistake and should offer more?

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Good one.

Here's the source:

http://www.lloydsbankinggroup.com/globalassets/documents/media/press-releases/halifax/2014/140315-haifax-buying-vs-renting.pdf

They also include a sum to take account of interest lost on the deposit.

Including IO mortgage payments is a slight of hand imo, no mention of a provision for an alternative repayment vehicle is mentioned. So a fraction (albeit unknown) of the 'buyer' costs are not buying at all, in the sense the press release means to convey.

Strange though, place I rent would cost about 20% more than the study's £172k, yet the rent we pay is under the £769 quoted. maybe I made a mistake and should offer more?

The place I rent would cost about 100% more than £172k, but I pay significantly less rent than £769.

Presumably we are "outliers" and should be ignored when compiling the statistics so as not to "distort the market"?

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The place I rent would cost about 100% more than £172k, but I pay significantly less rent than £769.

Presumably we are "outliers" and should be ignored when compiling the statistics so as not to "distort the market"?

Ditto

They are not comparing like with like, but it suits their argument - so let them - I'm 'quids in' renting, and only I need to know.

Edited by LiveinHope

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The place I rent would cost about 100% more than £172k, but I pay significantly less rent than £769.

Presumably we are "outliers" and should be ignored when compiling the statistics so as not to "distort the market"?

Seems fishy, doesn't it?

Although I pay less than the quoted UK average, I pay way more rent than the supposed 3 bed average for my region (quoted at £535, NW). Maybe I am being ripped off after all.. :)

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insurance

decorating

breakdowns

fences down

trips to the garden centre

improvements

all the thing my neighbours do every week....all the things I used to do...but dont any more.

And when they stop doing all this?...the placed become overgrown, delapidated and lose value...and I have neighbours like this too...too old and frail to be able to cope...

Life isnt about a balance sheet.

...they pay rent in different ways.....for cleaners, decorators, gardeners, cooks, shoppers.....they also do not often understand what is value or what is overpriced or what they should be paying or what they shouldn't or how to change it if they did, wanted or could care.......many years of inflation have confused their brains so if you told them a banana is now £1 each why should they question it? ;)

Edited by winkie

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Then it's time to sell.

If I HTB'd where I'm renting, my monthly costs would go up by about £800 before worrying about maintenance. Think I'll stick to trusting my maths over newspaper maths!

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The place I rent would cost about 100% more than £172k, but I pay significantly less rent than £769.

Presumably we are "outliers" and should be ignored when compiling the statistics so as not to "distort the market"?

One wonders how much hot dosh has gone into property for laundering purposes, where the actual returns are not important. You can run a fair sized BTL empire with relative anonymity if you buy for cash.

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One wonders how much hot dosh has gone into property for laundering purposes, where the actual returns are not important. You can run a fair sized BTL empire with relative anonymity if you buy for cash.

Do you mean outright cash purchases or rent from phantom tenants to pay the btl mortgage?

That's what I'd do...

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Totally meaningless statistic of course - as the figures will vary across the country.

In my part of east London where prices have reportedly gone up 20% in a year the monthly mortgage (with a 10% deposit) is now not far off 50% more than the typical rent for a similar property. And that's before you factor in service charges, maintenance etc etc. It certainly doesn't work in London.

Still why would you not trust a bank that nearly brought down our entire economy 5 years ago! :lol:

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i said two days ago with the crazy bubble prices returning in some parts of the country that at least now we will have seen an end to those idiotic articles claiming buying is cheaper than renting.

so, id chalk this down to vested interested nonsense, or propaganda as i like to call it.

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Based on my own circumstances I could save 45% of my rent (gets better over time) if I buy my rental and start paying a mortgage.

This is if I take out a BR + 1.99% Tracker from Santander with a 40% deposit, which is currently earning 1.71% Gross interest (instant access).

It would take me 11 months to break even before I start seeing the savings - 2% buying cost, 1% stamp and 1% for solicitor / mortgage fees.

These calculations are done with the mortgage payment and rent set at exactly the same level.

It would take 180 months (15 years) to clear the 60% mortgage.

I did my own spreadsheet for these calculations, which factors in the savings / deposit interest offset. I didn't incorporate any maintenance costs or buildings insurance.

Adjusting the spreadsheet to factor in a typical H2B deal - 5% interest with a 5% deposit, same monthly amount for mortgage, after 300 months (25 years) I'd have paid off 2.5% of the mortgage leaving just 92.5% from the 95% I started with :lol:

I guess it is better to buy then rent after all :P Plus you get to spin the wheel at Osborne's Lucky Wheel of Housing Misfortune.

Edited by MrFlibble

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Je ja vu

http://www.lloydsbankinggroup.com/globalassets/documents/media/press-releases/halifax/2013/2109_buying_renting.pdf

21/09/2013

Almost £900 a year cheaper to buy than rent

In contrast, home buying costs in 2008 were over £4,200 per year higher than renting

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The rent figures for pricate rented come from the English Housing Survey (Annex Table 4: Median weekly rents, 2008-09 to 2012-13) - I believe this to be the only rental report and it's released yearly.

all private renters £ per week

2008-09 = 130

2009-10 = 133

2010-11 = 137

2011-12 = 138

2012-13 = 138

Are rents rocketing? I think not.

Are interest rates being manipulated down? I think so.

I still believe that all the rental reports that have vanished in the last 12 months have been suppressed because rents are falling.

I have still to find a credible (nos LSL) monthly rental index. Rightmove discontinued theirs last year.

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The article is a bit like comparing somebody who bought, and still drives an Austin mini in 1974 with somebody who leases a Mini in 2014. If you factor out four decades of car price inflation, the mini owner does indeed appear to have made a smart decision.

Edited by Pindar

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