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29929BlackTuesday

Please Check My Maths : Owner Versus Renter

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Two identical houses:

One bought for £200,000 and mortgage (for argument's sake) £600/m

One rented at £600/m

IF THEY DROP IN VALUE BY 0.3% that's a loss of £600 per month.

Therefore the owner pays 600 and loses 600 = cost of £1200/month

Renter pays 600 but GAINS 600 (assuming they then buy the house) = NO LOSS AT ALL.

= £12OO GAIN PER MONTH BY RENTING.

I know there's a fault in there somewhere. :huh:

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The owner might have repaid some equity but they've got ground rents to pay too.

The renter, assuming he has a deposit for a house, will be getting interest on that money. This may be below the rate of inflation but if he's saving for a house then it's house price inflation he needs to take into account, not CPI/RPI etc.

Edit: no ground rents on a house (usually), misread it as a flat. Cost of maintenance is similar though.

Edited by jimmy_joe

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  • 297 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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