Wednesday, November 17, 2010

Rent > buy (temporarily, at least)

Renting a home is more expensive than buying one

Renting a home is more expensive than buying one in 80 per cent of British towns, new figures have revealed. Rents are typically 10 per cent more expensive – although in some towns, they exceed mortgage payments by almost 40 per cent, according to the research by property website Zoopla. House price falls and low interest rates have reduced the monthly cost of owning a home. Nicholas Leeming, a director at Zoopla.co.uk, said: “Buying has always been somewhat cheaper than renting, but we’re now seeing a real insider-outsider divide in the housing market. [I've been watching a few houses near us - well, 48 according to Rightmove - and we've saved £35,000 on one house by not buying it when it was on the market. That's more than 3 years' rent...Stick THAT in your pipe and smoke it!]

Posted by notyethomeless @ 03:25 PM (2151 views)
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34 thoughts on “Rent > buy (temporarily, at least)

  • Rubbish!.I rent and I have index link savings and the interest more than pays the rent. I pay no maintenance or insurance. It has lost at least 60k in value over 2 years and as I am not buying gallons of magnolia paint I able to save considerably in-excess of any mortgage payments. May savings are increasing by 30k a year and the house falling by a similar amount.

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  • sibley's b'stard child says:

    Buy, buy, buy, you fools!

    Stupid renters, you may as well be throwing your money down the drain. C’mon in to the home-owner party, it’s cosy warm with a veritable cornicopia of vol-au-vents and bubbly.

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  • And on the flip-side, 0% of renters are in negative equity, 0% will be repossessed and 0% are in mortgage arrears.

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  • presumably if rents are only 10% more expensive, equilibrium will be reached when interest rates become 10% more expensive – i.e. move from 0.5% to 0.55%. Anything above 0.55% would imply that renting is cheaper. So if rates reach 15% as they have done in the past…

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  • mark wadsworth says:

    I applaud all the previous comments.

    This is just Home-Owner-Ist propaganda of the worst ilk, and it’s not even true, not even if you ignore the capital losses every year, not even if you ignore the interest foregone on a notional 20% deposit, not even if you are the most inept person in the country with half a maths GCSE to your name.

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  • Thecountofnowhere says:

    …and….100% can easily move to take a new job, 100% have no maintenance costs and 100% arent s**ting themselves that interest rates will go through the roof.

    This smells of blantant ramping and b*******s

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  • sibley's b'stard child says:

    “And on the flip-side, 0% of renters are in negative equity, 0% will be repossessed and 0% are in mortgage arrears”.

    Yes, that works for me also.

    I’m no statistician but surely such ‘data’ would be subject to too many variables to make such a claim, no. After all, what are they basing the comparison on. I mean, the amount of rent demanded on any property would apply to anyone regardless. But, when they say cheaper than buying is that based on a presumed amount of equity?

    Anyway, i’d say my rent is marginally cheaper than current (cheers 666…) market values…

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  • sibley's b'stard child says:

    “notional 20% deposit”

    Ah, cheers MW, you’ve unwittingly answered my question.

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  • “Renting a home is more expensive than buying one in 80 per cent of British towns, new figures have revealed.”
    … although the cheapest option is still squatting.

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  • mark wadsworth says:

    I can’t search Rightmove from work, but using the figures in the article for average rent in York of £978 per month, assuming 5% interest and an 80% LTV mortgage, that would buy you something for £293,400.

    I can’t work out what you (a) can rent for £978 per month or what you (b) can buy for £293,400, but I’m pretty sure that (a) will be a lot nicer than (b).

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  • Don’t forget stamp duty, solicitor’s and estate agent’s fees.

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  • mark wadsworth says:

    No seriously, this is filth and lies.

    I admit that my situation is not normal, but the interest on the money we earn (which would be sufficient to buy the house if they dropped the price to a realistic 25% less than what they were expecting for it two and a half years ago, i.e. ten per cent less than what the much nicer house next door sold for in late 2009) covers half the rent; half the rent is (say) £10,000 but the house is falling in value by at least £50,000 a year, so s*d that for a game of homeowners.

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  • Im paying £595 per month on a 3 bed house (total refurb) that was £220k when up fro sale a few years back…. so that means my landlord is getting just over 3% on a valuation of 3 years ago….. is that right?…. probably valued just under the 200k now….. should I sit tight MW?
    Youre all right on here….. no maintenance……..no worries…… no neg eq….

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  • sibley's b'stard child says:

    A bit rough-and-ready MW (although you can’t view the links yet…):

    4 bed terraced house £975 pcm

    http://www.rightmove.co.uk/property-to-rent/property-27447091.html

    4 bed semi £295,000

    http://www.rightmove.co.uk/property-for-sale/property-25881703.html

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  • Forgot to add……. £360k savings in Nat Wet instant web acc at 2.89%……. not boasting just asking MW if (in his opinion) or other well informed if Im doing the right thing renting …. cheers…..

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  • bluebeach can you just fill in the natwest security info as your account has been compromised

    1) your full name and address

    2) you password and username

    3) your pin number

    4) your date of birth

    lol

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  • @ bluebeach – All that money just sitting in the bank! Bet you wish you’d bought a load of gold instead.

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  • I’m not boasting either but we’ve just had a new dishwasher, new patio doors and a new boiler, and all I had to do was be there to let them in!! Hurrah for renting I say.

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  • Cyril….. loking back…yes….but if things go very pop…. then the missus would do her nut for gambling…it might well have been the gee gees – wheat– the next pope even….. no…Im prepared to take a short term hit over say a year with inflation rather than risk on a gamble at mo….. Mark…. do you want may inside leg measure too?

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  • mark wadsworth says:

    SBC, excellent work – assuming the two houses to be in the same location, location, location, you have just proved that it is cheaper to rent a 4 bed detached than it is to buy a 4 bed semi. Plus you keep the little bit of interest you have on the notional 20% deposit. And no capital losses, no SDLT, fees, hassle.

    BB, in that case you are in a similar position to me, only your bank interest after tax comfortably pays the rent, so what you are getting out of this is the amount by which the house falls in value. Even if that’s only 5% a year, that’s a £10,000 profit to you, good sir.

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  • mark wadsworth says:

    SBC, oops, cheaper to rent a 4 bed OK terrace than to buy what looks like a very nice semi. So you are fairly close to a break even on a cash basis, but certainly not 40% better off.

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  • there will come a point when all these landlords/ladies will throw the towel in and sell up for such small returns, anything less than 6% is terrible, if rates go up they can kiss any return goodbye.

    On another point I have seen some price reductions in wales of more than 10% over the past month many of the properties have been on market for around a year, some are really nice yet they remain unsold

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  • Thanks MW…. I will have a beer tonight on that thought……

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  • mark wadsworth says:

    SBC, furthermore, that 4 bed terrace is near the centre of things, the train station and so on; the nice semi is at the ar*e-end of boring.

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  • If there is ever a moron-crunch housing will be in huge trouble.

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  • Pay 675 a month on property valued.. at 170k. Had three people round this year checking or fixing.

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  • I think that it is cheaper to buy than rent. No amount of wishfull thinking will remove the bonus that owning ….(or renting it from the bank for the enraged purists, before you all explode) that is why people are blogging on here – they want to take part in the great pyramid scheme.(and a chance for Gens X&Y to play too) . Grumpy – your’e different, the scenario towards the end of ones life changes dynamics…….I can’t fault your logic. But the nesting instinct can’t be denied, and all the geezers testifying to the pressure that their ‘mrs’ is inflicting proves it.
    I’m as pro ‘affordability’ as the next man, but lets not give old smuggy the last laugh – keep it real

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  • I think this is a very regional calculation. Where I live (CA8), I pay £850 pcm for a house that was valued at £400k at the end of 2007 (i.e. at peak). The reason (I think) for this is that the demographics of the area are (a) lots of retirees and near-retired boomers escaping to the country (b) a relatively quiet local economy (c) low wages for people of working age. Indeed I believe that the average salary in my town is £17k. So, high property prices for those that are older or who have moved out from cities and low rents as incomes are poor.

    Makes a mockery of buying for me. Actually, the fridge door is a bit stiff – time to call the landlord and have his guys come and fix it for free… 🙂

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  • although I think it is forced buyers that are allowing the EAs to get away with their dirty tricks (that and the fact that low IRs mean that sellers can wait – whereas buyers often are forced because they want a place to live / get on with their lives) prices around my are are still rising. I’m paying £1,000 per month for a cr4p house (admittedly a cr4p house that would cost 400,000+ to buy) and it feels like I’m losing out. The missus is forcing my hand and it looks like I am going to have to buy in the next few months. Still managing to persuade her to put in stupid offers only though. Something – like a hike in IRs – needs to happen soon tho, otherwise I’m screwed

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  • tenyearstogetmymoneyback says:

    bluebeach said “should I sit tight “The answer is yes – if you can.

    On Tuesday the lettings agency informed me that the landlord has realised he isn’t making any money
    (probably on the basis of an EAs valuation which is higher than 2007) and either wants 17% more rent or to sell
    (or more likely sit there looking at an empty house).

    Its a bit of a S**t if you have to move every fifteen months, as last time it cost about £700.

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  • Bluebleach
    Not very wise to have that much in one account. You’re only covered to £50k should anything happen to natwest in the coming new round of bank/country bust ups.

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  • @28..Ditto.. Bluebeach -Spread it wisely. I’ve even invested a lump in premium bonds, it’s paying out regularly, but not 3%. Like you i’m happy to take a short term hit and also have the chance of a larger return (Low risk low return gambling).

    IMO, keep renting for at least another year. We’re going to be in a much better place.

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  • tenyearstogetmymoneyback says:

    str 2007 and markj69. I thought the same myself last night especially when they said on the news how much exposure RBS has to
    Irish loans (I think I will start a new thread on that one).

    I have also been wondering, if I decide to buy, how I would get the money to the Solicitor (who I believe have professional insurance). I guess it would have to be a cheque from Natwest, cheque from Nationwide, cheque from YBS etc. The only alternative would be to round all the money up in an NS&I account which would then be covered.

    It shows what a state we have got to when Bank accounts are only covered up to 20% of the value of a grotty house

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  • Lazy rubbish journalism as usual. Wonder how much her Buy-toilet portfolio has dropped to spark this article.

    Only time to buy when such articles do not appear in the press for at least 5-6 months.

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