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Bingley Bloke

Renting For Life - How Does It Work?

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I keep hearing about how the British are all obsessed with property ownership and that the French, etc. have a rent culture. But supposing I did rent for life, what would I do when I reach retirement age?

I wouldn't own a home so I would have to continue renting.

There's no way my pension would cover the cost of renting so I'd have to carry on working – Due to the high cost of living it's unlikely that I would be able to build up enough money to sufficiently suppliment my pension that I could retire and continue renting.

I'd have spent my working life paying practically as much as I would if I had a mortgage every month, but I'd have nothing to show for it. Instead I'd have spent my working life paying someone else's mortgage.

So, how does renting for life work? Where and how are you supposed to live after you retire?

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So, how does renting for life work? Where and how are you supposed to live after you retire?

Most people who are retired and rent, who cannot afford the cost, get benefits on top of their pension to cover rent and council tax. It is the people who are just above the benefit limits who really suffer and are worse off than those on benefits.

The moral is make sure you either have no pension/savings or a big one!

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I keep hearing about how the British are all obsessed with property ownership and that the French, etc. have a rent culture. But supposing I did rent for life, what would I do when I reach retirement age?

I wouldn't own a home so I would have to continue renting.

There's no way my pension would cover the cost of renting so I'd have to carry on working – Due to the high cost of living it's unlikely that I would be able to build up enough money to sufficiently suppliment my pension that I could retire and continue renting.

I'd have spent my working life paying practically as much as I would if I had a mortgage every month, but I'd have nothing to show for it. Instead I'd have spent my working life paying someone else's mortgage.

So, how does renting for life work? Where and how are you supposed to live after you retire?

i believe in germany you need a 40% deposit before you can get a morgage, helps keep prices sensible and makes the young save. Rents for an area are capped at a value, if your a landlord you cant rent at above a level set by government.

Edited by moosetea

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I keep hearing about how the British are all obsessed with property ownership and that the French, etc. have a rent culture. But supposing I did rent for life, what would I do when I reach retirement age?

I wouldn't own a home so I would have to continue renting.

There's no way my pension would cover the cost of renting so I'd have to carry on working – Due to the high cost of living it's unlikely that I would be able to build up enough money to sufficiently suppliment my pension that I could retire and continue renting.

I'd have spent my working life paying practically as much as I would if I had a mortgage every month, but I'd have nothing to show for it. Instead I'd have spent my working life paying someone else's mortgage.

So, how does renting for life work? Where and how are you supposed to live after you retire?

In short: housing is cheaper and pensions are higher.

I don't know about France and Germany etc, but I imagine their largely like Sweden in this respect.

Essentially, renting is a lot cheaper and pensions are a lot higher (relative to how much things cost). Most flats are rented through a large company usually run by the council, which keeps unhealthy BTL speculation down. It saddens me to say, that recently I think there has been a big increase in BTL, but hopefully Sweden will not go the same way as Britain, where you have to work all hours just to pay for a poxy flat.

As a comparison, my friend used to rent a large, high standard 2 bed flat for about 250 pounds per month. His wage was lower than it is now that he's moved over here, but not to the tune of 4-5 times lower (Edit: which is how much more expensive it is to live in a 2 bed flat here).

Edited by Henrik

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"make sure you either have no pension/savings or a big one!"

Local councils may be a lot less generous in years to come

Except with their employees pensions of course... :ph34r:

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It is not necessary to "rent for life"

Exactly.

I'd guess that most people here would like to buy one day - I know I certainly will.

The debate is on whether now is a good or bad time to buy.

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BB,

you have hit the nail on the head.....

mind you housing benefit will pay rent in retirement and there are other state handouts, depends if you qualify I.E. no money saved, and if you are happy taking benefits in retirement other than pension, and not kicking in till retirement age

realisticly this is what long term renters without a great deal of pension provision are looking at. If you do have decent pension or other income then of course every month a fair chunk of it will dissappear in rent not a lot of state help unless you qualify for income support or various ill health benefits, no security about where you live (imagine being 70 odd and having to move every two to three years as landlords buy and sell your home!) no thanks not for me.

a simplistic example above but broadly speaking is what the options are.

the post i have just read about the family split apart over money and inheritance i can see happening as kids reading this forum are tempted by long term renting now in their 20's and 30's suddenly realise in their late 40's and 50's that renting has cost them dear over that period and are looking at a future with lack of security, a monthly cost that will go on till you die, a pension that will not keep you in the lifestyle that you are accustomed to and want to preserve having to claim state benefits to live (not a good topic of conversation at the Golf Club), watching your elderly relatives sitting on a pile of unused asset, potentilay hundreds of thousands, while you see a bleak future for yourself.

house prices may go down over the next coulpe of years but compared with the alternatives later in life i would rather be a long term homeowner than long term renter,

short term ok you have got a case but you will have to judge the market very carefully and if the economy suffers badly and prices do drop significantly you may not be in a position to be able to buy, bad times affect everyone, other posts show issues in IT.

MH

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short term ok you have got a case but you will have to judge the market very carefully and if the economy suffers badly and prices do drop significantly you may not be in a position to be able to buy, bad times affect everyone, other posts show issues in IT.

I'm afraid that the long term prospects is not an argument for buying now.

Assume that you buy now and in a couple of years we have a recession and you lose your job or have to take a pay cut so that *at that point in time* you could not buy the house you "own" (i.e the one you bought previously).

If that was the case, at that point in time, what hope would you have to pay for the mortgage you took out previously when the going was good? Of course, if you could not buy at the price in the future, you would have no chance of paying the mortgage of the commitment (that you took out in previous years when the going was good).

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the generation of 15yrs-20yrs have no property hang ups like us lot.

i cant see they would be bothered.

whatever happens, there wont be the millions of hungry FTBs ready to lay down 25 years of commitment like ttrtt might be expecting. most dont have steady work that pays enough to fuel this idiocy.

maybe the crash will take three years. maybe it will have to wait for this generation to flop.

either way. i think this silly boom could be the very last time housing can be intergrated so much into the economic support of the uk.

housing association affordable rentals are the prime choice of any discerning 20 something.

not 200k clapped out terraces 100 miles from your family on a razor line IR and rising utility bills.

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Good thread ... let's play out a future senario.

If the btl'ers win this battle of circumstance, and keep their portfolios in order ... the rising generations will be life renters.

How will this effect the future welfare state?

Surely, 30 years down the line, UK PLC would prefer to have non dependant home owners, rather than paying support giro's directly into the pockets the freeholding elite. Would such an obvious social dichotomy be tolerated?

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I keep hearing about how the British are all obsessed with property ownership and that the French, etc. have a rent culture. But supposing I did rent for life, what would I do when I reach retirement age?

I wouldn't own a home so I would have to continue renting.

There's no way my pension would cover the cost of renting so I'd have to carry on working – Due to the high cost of living it's unlikely that I would be able to build up enough money to sufficiently suppliment my pension that I could retire and continue renting.

I'd have spent my working life paying practically as much as I would if I had a mortgage every month, but I'd have nothing to show for it. Instead I'd have spent my working life paying someone else's mortgage.

So, how does renting for life work? Where and how are you supposed to live after you retire?

if your rent is cheaper than the cost of owning invest the money saved every month in a tax efficient pension and after 30years of that you will have a substantial fund to buy or continue renting.

obviously if conditions to buy are more favorable -fundamentals of the market are more back to the long term average-then enter the market be it in 5, 10 or twenty years time.it may be the right time to buy in next few years but it is not now.

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Good thread ... let's play out a future senario.

2006 rent £750 mortgage £750

2016 rent £1195 mortgage £750

2026 rent £1515 mortgage £750

2031 rent £1705 mortgage £0

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Most countries have "rent control" where landlords have to follow them. My friend from new york couldnt believe landlords could charge what they wanted when he came to visit the uk.

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2006 rent £750 mortgage £750

2016 rent £1195 mortgage £750

2026 rent £1515 mortgage £750

2031 rent £1705 mortgage £0

Hmm, maybe, maybe not. If we assume that CPI (and hence salary increases) stays at or around 2%, and the real cost of living increases at about 6% by 2036 the cost of living (assuming currently 750 pcm) would be over 4k pcm, but the average salary (assuming currently 1500 pcm) would be less than 3k. Rents won't increase if nobody can afford to pay them. It's all a gamble in the long run.

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If you have an IO mortgage you're no different than renting.

Renting for life works if the money you save from not paying a repayment mortgage grows (as investments) at a faster rate than the capital appreciation in property. By the time you retire you should have more cash than another person has equity in their house - enough extra to pay the rent from the interest.

Fairly tricky, I agree.

I don't know how common this is in Germany, but the (renting) friends I have over there often have parents or grandparents that own property - something that has been passed down through generations and which will be passed to them in time. Otherwise I think the German state pension pays something like 50% of your final income... enough to downsize and continue renting comfortably. The whole thing will implode soon though as they can't afford to continue that level of payment with an ageing demographic.

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2006 rent £750 mortgage £750

2016 rent £1195 mortgage £750

2026 rent £1515 mortgage £750

2031 rent £1705 mortgage £0

Where do you get this 25 year fix mortage? I want to sign up!

frugalista

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Where do you get this 25 year fix mortage? I want to sign up!

frugalista

Thread on the main site - Kentish Building Society. 5% (approx) fixed for 25 years.

You going to consider buying now? Or is there now some other reason why you'd think it cheaper in the long run to rent?

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2006 rent £750 mortgage £750

2016 rent £1195 mortgage £750

2026 rent £1515 mortgage £750

2031 rent £1705 mortgage £0

what property can you buy today that costs 750 on a repayment mortgage, but still rents out at 750?

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Put kids through private school and uni rather than buying an overpricsed house. Retire, take savings and pension payout and buy caravan or chalet. In winter, rent or live with brats.

Simple.

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Move somewhere you don't get ripped off so much and that has some form of decent rent controls/rights. Becoming a serious option for me now, this place is starting to suck big time.

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Put kids through private school and uni rather than buying an overpricsed house. Retire, take savings and pension payout and buy caravan or chalet. In winter, rent or live with brats.

Simple.

Nice idea, though I'm not convinced that encouraging your kids to go to university will guarantee their future wealth and security. Spiralling debts and a crap job are the rewards of many of today's graduates. Get them instead to produce 20 grandkids at the earliest opportunity and cruise through retirement on interest earned on their benefits.

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Nice idea, though I'm not convinced that encouraging your kids to go to university will guarantee their future wealth and security. Spiralling debts and a crap job are the rewards of many of today's graduates. Get them instead to produce 20 grandkids at the earliest opportunity and cruise through retirement on interest earned on their benefits.

Like your style snowman! :lol: Sadly the welfare state won't be viable in 20 years, if you ask me.

But yes, uni ain't everything. But then neither is owning a house...

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Guest muttley

If you have an IO mortgage you're no different than renting.

Renting for life works if the money you save from not paying a repayment mortgage grows (as investments) at a faster rate than the capital appreciation in property. By the time you retire you should have more cash than another person has equity in their house - enough extra to pay the rent from the interest.

Fairly tricky, I agree.

I think you make a valid point.

Unfortunately most of us are poor savers and poor investors.

If you lack financial discipline then mortgage slavery works.

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  • 301 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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