Friday, October 5, 2007

And it’s cheaper to rent

House costs 'five times income'

Headline says it all, but this quote near the end made me smile...Across England, the cost of renting was generally up to 30% cheaper than a mortgage on the same property.

Posted by sara @ 06:54 AM (997 views)
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8 thoughts on “And it’s cheaper to rent

  • eyeoftheweasel says:

    Another interesting point in this article is “This ratio of house price to income is far higher than at the peak of the last price boom in 1990.” The “interest rates are lower now” argument doesn’t really cut it.

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  • 30% difference is probably the equivalent of capital repayments….

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  • I make it 50% of salary goes on mortgage if you take average wage, average price, 5% deposit and repayment mortgage…

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  • In my case, our renting is saving us more than 30% – more like 60%. We are currently paying £595 per month for a 3-bed 3-reception rural house. Similar properties on the market nearby (admittedly they are not selling) are advertised around the £300,000 mark, which would mean an A&L INTEREST-ONLY mortgage (best current rate) with the following costs.

    Premier 2 Yr Fixed Rate 5.87% 30.09.2009

    Payment (Month) … 1 – 24 (5.87%) £ 1,467.50 … 25 – 299 (7.89%) £ 1,972.50 … 300 (7.89%) £ 323.36

    So, even to start out we are paying just 40% (30% after 2 years) of what it would cost us to buy, plus by not renting from the bank, we do not have maintenance costs. I really don’t know why people bother to buy homes when rents are so cheap in comparison.

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  • Interesting. Of course rural rents relative to prices are much lower than in the cities. 2 bed flat in Streatham London rent is £900 per month. Mortgage with say 80% is £1500. In 25 years time nothing to pay at all of course provided you pay back the capital. Oh and of course complete security of tenure.

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  • maddison you can do 1 of two things. 1. Buy your streatham rabbit hutch and pay for it in 25 years taking the gamble that prices might fall or you can rent similar , or 2. save the difference (including maintenance costs which are ALWAYS underestimated by BTLrs) taking the gamble that prices will drop and you will be able to buy the property cheaper in the future. I dont think anyone here is saying that buying a house is never a good idea (well im definitely not) its just not a particularly good one at the moment. Really we are all big boys and need to take responsibility for our own actions, and weigh up the risks involved. As said you either rent property or rent money. IF you had bought years ago as a BTLr then your yeild would look impressive and you may be well on the way to having someone else pay for the property, but BTL now? You do the maths! An Englishman’s home becomes a prison as BS / Banks will not be keen on leading money to buy another property if there is negative equity on the first. A lot can happen in the next 25 years, and timing is everything!!!

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  • The idea of renting does have its attractions if you have a decent pension. No doubt Uncle Chris, for example, will have a good army pension plus any other pension from his second career. But for those of us who don’t earn large salaries and won’t have large pensions, the propect of owning your own home and having less bills to pay during retirement (mortgage/rent) is very attractive. And as Maddison points out: complete security of tenure. Who wants to keep chasing the best rental bargain when you’re retired!

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  • ‘the cost of renting was generally up to 30% cheaper than a mortgage on the same property.’

    This quote is effectively the same as the BEEB telling us that new BTL’s should expect to fund 30% of the mortgage repayments on top of any letting fees, services charges and maintenance costs.

    Ie: The BTL model is well and truly dead.

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