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Rental and Purchase compared


RJG18
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With rent so much cheaper than purchase at the moment, I thoight I'd see who things compare are the top end of the market.

So, if you wanted to spend £2,600 per month (which is the typical repayment required on a £400k mortgage), lets see how things compare in West Sussex:

RENTAL:

£2,600pcm will get you:

5839_88809_IMG_00.jpg

7 Bedroon, detached, 3 reception, 2 bathroom, kitchen with aga, breakfast room, study, playroom, 2 cloakrooms, drssing room, large attic, parking, double garage, garden.

PURCHASE:

£2,600pcm will get you:

4165_116240A_16240_IMG_00.JPG

4 bedroom, semi-detached, 2 reception rooms, combined kitchen diner, 1 bathroom, cloakroom, single grarge, garden.

Surely there's just no contest?

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rjg18

the type of properties you have highlighted are hardly indicative of an active landlords portfolio. i could put as many properties as you want on the screen where the rent is far in excess of what it would cost on a mortgage. we can all spin things the way we wish to show the light.

as ttrtr says, the examples you have shown are probably of someone who has had to go abroad for 12 months, and wants their house/home still there when they come back. i'm sure they won't have bought that prop as a btl/pure investment. i'm not saying that there are no properties out there, that have been bought by amateurs that will fill your desired 'pitch', but at the same time please keep things in perspective.

regards BBB

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Sorry last two posters, I don't accept your "rent is just dead money" argument. If I had to choose where to spend £2600 a month, I'd rather live in a 6-7 bedroom country mansion with acres of land (in many cases) that the overpriced collection of 3/4/5 bedroom semis/detatched and bungalows that come up for the same monthly outlay if you were to purchase right now.

... and on the "renting is dead money" argument, if you were to choose to buy one of those clearly inferior properties at the top of the boom, of your £2600 over £2000 is going to the bank in interest payments. Dead money, wouldn't you agree? You'd only be putting £600 towards the capital value. If the deadmoney argument bothers you so much, you could rent something like this for £2000 a month:

9006_PG32_IMG_01_t.jpg

and put the £600 difference into a savings account each month. You'd financially be better off, and have a much better lifestyle and nicer home.

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They do seem very cheap to rent. However, that's almost certainly because of the lack of demand, which may well change very quickly. The high-end rental sector took a huge whack of 9/11 - yields dropping 30%, but is now recovering, especially in London, where people from overseas are coming back.

Basically, I agree with RPG, but BBB is also right, in that there are bits of the market that are still attractive to professionals.

Lucky

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>BBB:

the type of properties you have highlighted are hardly indicative of an active landlords portfolio. i could put as many properties as you want on the screen where the rent is far in excess of what it would cost on a mortgage. we can all spin things the way we wish to show the light.

Ok, BBB, I accept your challenge. Lets try the experiment as you suggest. In your prefered end of the market (lets say £500pcm). Using Rightmove, find 6 properties you could buy for £500pcm (capital repayment mortgage), which is around £75,000 purchase price, and find 6 peoperties in the same area that rent for £500pcm, and post the pictures on here. Lets see whether you find you get better value/quality properties spending your money on rental or purchase at this stage of the market cycle.

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... and on the "renting is dead money" argument, if you were to choose to buy one of those clearly inferior properties at the top of the boom, of your £2600 over £2000 is going to the bank in interest payments. Dead money, wouldn't you agree? You'd only be putting £600 towards the capital value. If the deadmoney argument bothers you so much, you could rent something like this for £2000 a month:

9006_PG32_IMG_01_t.jpg

and put the £600 difference into a savings account each month. You'd financially be better off, and have a much better lifestyle and nicer home.

..RJG18

..a wink ;) <----- means it's a joke/sarcastic comment...

...shirley you know that... :P

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>Lucky:

They do seem very cheap to rent. However, that's almost certainly because of the lack of demand, which may well change very quickly. The high-end rental sector took a huge whack of 9/11 - yields dropping 30%, but is now recovering, especially in London, where people from overseas are coming back.

Sorry Lucky, not getting at you (I seem to be fighting quite an aggressive corner on this topic, not my intention). However....

Saying rent is only cheap at the moment because of supply/demand issues is stating the obvious. Supply demand, in one form or another, is the factor that determine every aspect of property, the point worth debating is actually the "cause" of supply/demand issues. Your comment is like saying "The reason it's cold today is because of the Weather." Doesn't really mean much.

I don't believe that rents are currently low compared to purchase prices of property (i.e. Low yields) mainly because og the 11/9 terrorist attack that happened nearly three years ago. This is not a root cause of comparatively now rental prices across the country, it's not (I would suggest) even a contributary factor.

And you say rent is now recovering, expecially in London. Sorry, but all anecdotal, media and survey evidence seems to suggest the opposite. Rental prices are still falling generally, as are yields.

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HowMuch:>

"..a wink <----- means it's a joke/sarcastic comment..."

Sorry! Didn't notice it was a winking smiley, though it was just a "Smiley" smiley.

Got to get used to these new Smiley :D

P.s. - Webmaster, your winking smiley need more distinctive eyes ;):D

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RJG18...........i know you will all have a field day at this ................ i dont know how to post pictures on here (cringe/blush) i'm still getting to grips with typing......LOL. i'm about as computer illiterate as they come. (at least im being honest)

regards BBB

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BBB, that's OK, I'll give you a fighting chance on this.

To post a pic on here:

1) Find the picture you want to post, e.g. on Rightmove.co.uk

2) Right-click your mouse anywhere on the picture

3) Click on Properties

4) Halfway down the box that will popup is some text labelled: "Address (URL)". It will looks something like: "HTTP://" appearing twice at the front of the address, as it will already be in the box once.

8) then post your message as normal.

These instruction may look long and complex, but they're not. You'll find you can post a pic in about 15 seconds.

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[img

http://media.rightmove.co.uk/9k/8473/8473_...36_IMG_00_t.jpg[/img]

9402_74botcherbyave_IMG_01_t.jpeg

8473_526000023_526653445_IMG_00_t.jpg

ive chosen carlisle at random. i could provide another 10 of similar props in this one town alone (check the site if you dont believe me)

65 k property....5 year fixed rate of 5.85%....BIRMINGHAM MIDSHIRES (85%ltv) would equate to £264 pcm

55k property would equate to £227 pcm

right thats the mortgages, what about the rent? there isnt many props under £400 pcm in carlisle (strange that being as though the market is so saturated)

http://media.rightmove.co.uk/9k/8473/8473_...45_IMG_00_t.jpg

9402_9GLOUCESTER_IMG_01_t.jpeg

i know all the above props will rent for 360-400 pcm. any property does given a half descent location (as these are) .

so mortgages for £227-264 pcm

and rents for £360-400 pcm

regards BBB

ps: bear in mind this is just a quick flick in one town. if you do your research (as i do) the results are more dramatic. many thanks RJ for the computer lesson (seriously) is it possible to scoop these pictures up in one go and then 'dump' them in one go, or do you have to do them individually, as i have (rightly or wrongly)

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well that didnt go to well!!!!!

basically i posted two props for 55k , and one for 65k (rightmove website for carlisle) there is plenty more if you wish to check it out.

i then posted two similar props for rent @ 360 pcm

soz for the abortion!!

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BBB,

By way of a rebuttle, I think your mortgage estimates are based on Interest Only. To be comparable to my original post, these typical Carlisle terraces are arounf £65,000, which would mean a capital repayment mortgage would cost around £425 a month. Rental of a equivilent property appears to currently be on at around £320-360 pcm. I think this supports my theory that it is still generally cheaper to rent thant to buy at the moment.

From your example property (I've checked them myself on Rightmove), the amount of interest you would pay on a capital repayment mortgage for these properties is around £325 a month, which is no more than the rent.

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