Friday, Oct 09, 2009

Bit of blatent ramping

Press Association: Most renters better off buying home

Bit of dodgy calculations claiming that everyone is better off buying then renting by about £52 per month. But for this you need a 25% deposit (opportunity lost from investing that 25%), then you have to pay for upkeep and repairs. And there is the risk of further house price declines wiping out your 25% deposit...

Posted by europeanbear @ 07:42 AM (1678 views)
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1. tenyearstogetmymoneyback said...

And what is the value of being able to move when you want to.

Between 1989 and 1999 I was stuck in a house I hated which wasn't worth what
I paid for it (in fact when I tried to sell it in 1995 the best offer I got was 26% less than what
I'd paid.

Friday, October 9, 2009 08:41AM Report Comment

2. Frontier said...

Why they never include insurance, repairs and other costs??

Friday, October 9, 2009 09:27AM Report Comment

3. greenshootsandleaves said...

They'll have to hurry, though, what with house prices now going up by ... £56 a month (according to the Daily Whatsitsname). So, if they can complete within three weeks and their mortgage doesn't go up in, say, the next ten years, they'll be laughing. I already am.

Friday, October 9, 2009 10:38AM Report Comment

4. N1ak said...

It works both ways. We're considering buying at the moment because the ability to get a mortgage with low fixed interest means we can 'invest' money we are currently spending on rent.

Renting a 2 bedroom flat will cost us £21,000 over the next three years. Interest on the mortgage for a 3 bed house will be £12,500, lost interest on savings ~£1,750. Now a ~£7,000 saving alone probably doesn't make buying a financially sound move (especially given the risk of a hpc).

However that saving is over the first 3 years. During that time the mortgage will have decreased by about 30% so even with higher interest rates it is very likely to remain cheaper than renting for the remainder of the mortgage. Based on interest average 6% during the term we will save over £35,000 during the 10 years.

Friday, October 9, 2009 10:51AM Report Comment

5. fallingbuzzard said...

£50 a month. That just about gets you a taxi home in London. Utter nonsense over the short to medium term in any case since most young people don't want to buy, its not about affordability.

Friday, October 9, 2009 10:55AM Report Comment

6. 51ck-6-51x said...

So renting from a bank is cheaper than renting from a non-bank who covers some of the associated costs and takes on some of the risks involved with the ownership?
- Shock horror!
Sorry, but there is certainly an inherent value to renting and once you work out the maths properly, it's probably well worth the £50 ~£3.50 a month. What a joke article.

Friday, October 9, 2009 11:13AM Report Comment

7. 51ck-6-51x said...

Oh, the 'del' tag doesn't strike though my text? boo.
- The £50, above, is meant to have a line through it.

Friday, October 9, 2009 11:15AM Report Comment

8. 51ck-6-51x said...

...maybe I should have used strike?

Friday, October 9, 2009 11:16AM Report Comment

9. 51ck-6-51x said...

^ nope, didn't work either!

what about some CSS magic?
( probably not, as they probably ignore CSS within posts! )

Friday, October 9, 2009 11:21AM Report Comment

10. Nicowens72 said...

So assuming you have around 40-50 grand kicking around and interest rates NEVER go up and house prices DON'T FALL and you don't need to do ANY maintenance then it's a no brainer really - gee thanks Abbey!!

Friday, October 9, 2009 11:34AM Report Comment

11. still renting said...

And what about service charges, ground rent, buildings insurance, repairs and maintenance costs? My landlord pays for all these things, and I think they'll be costing him a bit more than £56 / month. Oh, and we'd better ignore the transaction costs of buying a house, like stamp duty, solicitors fees, mortgage arrangement fees, cost of a survey, etc.

Friday, October 9, 2009 11:49AM Report Comment

12. mark wadsworth said...

The Metro rehashed the same press release more or less word for word as well:

Most renters better off buying home.

Friday, October 9, 2009 12:01PM Report Comment

13. Mrb said...

£92,000 for an FTB house (don't believe this but.....)
25% deposit = £23,000

Assuming 4% savings rate
(23,000 *0.04 ) /12

= £76 opportunity cost vs renting

£76 - £52 (the number they quote as being better off buying per month)
= £24 a month better off renting, even using their own dodgy figures.

Friday, October 9, 2009 01:05PM Report Comment

14. Doctor Gloom said...

To me a desperate lender is piling on the pressure to the renters to make them uneasy in thier position. Obviously things aren't still rosey for some of the banks.

If I were you i'd pull your lot out of Abbey and stick it somewhere more secure.

Friday, October 9, 2009 01:52PM Report Comment

15. greenshootsandleaves said...

Earlier on I wrote: 'They'll have to hurry, though, what with house prices now going up by ... £56 a month (according to the Daily Whatsitsname)'.

I'm sorry, I'll read that again: on Sep. 30 the Express reported that prices were going up by £57 a day!!!
I fear it may well already be too late for poor Mr & Mrs Renter.

Friday, October 9, 2009 09:38PM Report Comment

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