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Rental and Purchase compared


RJG18
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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.

I don't agree with you. The payments over/above interest are a form of savings that shouldn't be compared to rent.

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RJG,

I am not talking about rental yields in general in London or anywhere, but specific areas of the market. I know someone who specializes in high-end, corporate lets (considerably more expensive than your examples), and these were seriously affected by 9/11. This affected demand to the extent that rents are much lower than they were before. Not because lots of people got into this area as BTLetters, but because people who were normally there looking to rent disappeared. They are only just now coming back. These are people for whom it doesn't make a lot of difference how much the rent is, within reason, they want the right property. The fact is that these rents have been rising. The person I know has told me how she has recently been able to raise the rents on a number of these properties. The yields may still be very low (say 5%), but they are a completely different category to the typical btl investment property that has swamped the rental market. My "friend" is anticipating that the trend of increasing rents is this sector is set to increase.

The same is probably true for BBB. In his bit of the market - the other end - what is happening across the board in the UK is simply not as significant.

But, I don't much care, to be honest. I'm more interested right now in the headline in the Evening Standard. I am stunned by it. I probably need to change threads.

Lucky

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RJ........

my point is these randomly picked properties are/would be profitable for a landlord. they are not in slummy areas (i do know carlisle, i worked there many years ago) and there will be/ are many people more than willing to pay rent, far more than a mortgage (for various reasons).

why bring capital repayment into it? all the other comparisons i've ever seen and heard on this site have been based around interest only, why change the rules?

my figures are for int only , as that is what a landlord would pay. so on a 55k mortgage with a 15% dipper he would have an interest coverage of around 160%. now i'm not being funny but 60% more (to rent) is quite a lot in my book, and im sorry but it certainly proves my point.

regards BBB

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RJ........

      my point is these randomly picked properties are/would be profitable for a landlord. they are not in slummy areas (i do know carlisle, i worked there many years ago) and there will be/ are many people more than willing to pay rent, far more than a mortgage (for various reasons).

                    why bring capital repayment into it? all the other comparisons i've ever seen and heard on this site have been based around interest only, why change the rules?

                    my figures are for int only , as that is what a landlord would pay. so on a 55k mortgage with a 15% dipper he would have an interest coverage of around 160%. now i'm not being funny but 60% more (to rent) is quite a lot in my book, and im sorry but it certainly proves my point.

                  regards BBB

...wasn't the whole point of this thread that it's cheaper for a tenant to rent rather than buy...

..that's why capital repayment was included in the calculations...

...using IO repayment figures in this regard would be nonsense as it's just rent to the bank...

...which point is it you think you've proved..?? :huh:

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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.

HOW MUCH YOU MUST BE JOKING? (jeez ....what a mouthful.....i'll just call you how much, if you dont mind.)

the above quote is what i said i would do, and that is what i have proven.

regards BBB.

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Just my humble little anecdote: £750 pcm (with free gardening service thrown in) for a stunning place in the SE which would easily cost more than twice that on a mortgage. Probably closer to thrice, considering what prices are like around here.

The fundamental problem I have with bulls is: why? Why would you want house prices to keep galloping along? It's a very large waste of money which could be put to better use doing more productive things, and it hurts current homeowners as surely as it does FTBs. I have a lot of friends who want to sell, need to sell, but are now stuck because the next rung is just too high - and a move to a lateral rung is no longer possible either.

If BBB wishes to buy up all the dingy awful houses this country has to offer, more power to him. Come the crash they'll all be under new management anyway.

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