Stamp duty returns and higher borrowing rates to supess prices?

[Padrino]

Ok, I've asked because if you read your post 9 it gives impression that you have 30 years rate at 2.5%

[jrw]

Ok, I've asked because if you read your post 9 it gives impression that you have 30 years rate at 2.5%

sorry should have put 'currently at...'

[Padrino]

sorry should have put 'currently at...'

No harm done

[Llanigraham]

JRW,

Whilst I can see how you come to your "understanding" it is very simplistic. What you haven't built into your 25 year ownership are repairs and maintenance. For example:

1 or 2 new central heating boilers

2 or 3 new hot water tanks

Couple of new radiators

Other plumbing repairs.

A complete re-wire after 20 years is a strong possibility.

External repainting

External repairs

Boundary repairs

Plus as the owner you are responsible for the bricks and mortar insurance.

It may not sound like a lot, but you would be surprised how these small things start to add up. And this is for a house built in the last five years. You start looking at houses built in the last 20 years and the costs can rise even further.

Note, I'm not saying you are wrong or right, just that these are things you don't seem to be taking into account. I know of several couples who have reached their 60's who have sold up their large family homes, moved into smaller, often newer rentals, and are living off the proceeds very nicely.

[jrw]

JRW,

Whilst I can see how you come to your "understanding" it is very simplistic. What you haven't built into your 25 year ownership are repairs and maintenance. For example:

1 or 2 new central heating boilers

2 or 3 new hot water tanks

Couple of new radiators

Other plumbing repairs.

A complete re-wire after 20 years is a strong possibility.

External repainting

External repairs

Boundary repairs

Plus as the owner you are responsible for the bricks and mortar insurance.

It may not sound like a lot, but you would be surprised how these small things start to add up. And this is for a house built in the last five years. You start looking at houses built in the last 20 years and the costs can rise even further.

Note, I'm not saying you are wrong or right, just that these are things you don't seem to be taking into account. I know of several couples who have reached their 60's who have sold up their large family homes, moved into smaller, often newer rentals, and are living off the proceeds very nicely.

I purposely haven't stated these things as it could go on forever....I am just doing it in the simplistic form as a first time buyer who could go either way. So far i haven't had an answer...

As for associated costs... The costs of these are accumulated on the cost difference between mortgage and renting. I have had a new boiler and several new rads in the last 5 years and all of this has come to less than £2k (no hot water tanks as its a combi). That £2k can be made up in little over 2 years on my scenario above.....Also past that, when the mortgage is paid off, there is £600 a month that is still being paid on the rental property.

['daiking']

No, without taking timing into consideration.........you can't rely on that....that is a variable just like interest rates.

I will add to scenario then as you seem to make it up to suit.

You have been offered a job which starts in 2 months time that you have accepted that is a non commutable distance from where you are currently living and you have to get a house, whether renting or buying.

The figures aren't up for consultation.....£520 mortgage vs £600 rent (just a quick calc on what is available in my area for houses costing £125k and their associated rent.

I did say you were rushing me. I will give you the rest later but I'm still waiting for the answer to my question.

[jrw]

I did say you were rushing me. I will give you the rest later but I'm still waiting for the answer to my question.

What question? Your replies are that cryptic I probably wouldn't even know you were asking a question.

[XLBaconDoubleCheese]

Hummmm, this thread is really longing out now, i`v not got a sausage what the argument against buying is, none of it makes sense

[Babs]

Nope, makes no sense to me either Matt...

Meh. I'm happy with my mortgage. Rents have gone no where but up around here. At least I can call my home mine*.

* Yes, yes, I know it's the banks, technically. But a rented house will never be your home.

[Lazy Daisy]

Renting??, buying??, renting??, buying??, as long as you've a roof over your head does it really matter?, both have pros and both have cons, Padrino I'd guess that with your flat you're either single or with no young family in tow?, in this instance renting works for you. Jrw you mentioned 112k which in the Midlands I'd guess will buy a 2 or 3 bed house so you're requirements are different so buying works for you. In the loooooong term buying is the more sensible option as long as you class your home as a home rather than a financial product.

['daiking']

What question? Your replies are that cryptic I probably wouldn't even know you were asking a question.

The question was why does putting a roof over your head always cost you money?

Even if you own your own home outright, there is a cost to living there. Ever heard of opportunity cost? Same cost as if you rent or are paying a mortgage.

Next up is rent vs buy

[jrw]

The question was why does putting a roof over your head always cost you money?

Even if you own your own home outright, there is a cost to living there. Ever heard of opportunity cost? Same cost as if you rent or are paying a mortgage.

Next up is rent vs buy

Yeah and? What has this got to do with buying or renting?

Buying will cost slightly more short term for maintenace etc (as i replied earlier to another post) but long term as i have said about a million times now after the mortgage has completed i will have an asset and be paying no more monthly payments......seemingly this is still too difficult for some people to fathom

This had gone on far too long now and going round in circles and i still haven't had an answer......

Unsubscribing as i am really bored now and you have no real answer as to why you are both adamant that renting is better. :wall:

[lol-lol]

I suppose if one thinks a house is losing value then it can be best to sell if the evidence is that it will fall substantially further.

Also if the value is less than the mortgage then it seems logical to stop paying the mortgage, putting good money after bad, declare oneself bankrupt, rent and then start working to a fresh start. This is what millions have done in Ireland, USA and other places where property prices crashed. Let the banks take the hit as they are also largely responsible for the property bubble.

Not worth considering selling even though the house I have even though is propably static in value or perhaps loosing a few hunded pounds a month value and the mortgage is only £130 a month for the interest part of the loan which is the only part I am paying off as equivalent rent would be around £800 so it is still economical to keep the mortgage up rather than try and sell but I am amazed that so many are paying mortgages for £1K a month for a house that is losing value in real terms but I suppose the upheaval etc has a value to it too.

In the US there have been 4M houses recovered by the banks and it is estimated by Bloomberg that the figure at the end of this house price adjustment period will be close to 10M properties recovered by the morally corrupt banks. Thankfully we have Biulding Societies in the UK which generalt seem to be better on rates and less quick to liquidate I gather.

Edited 26 March, 2012 by lol

[cheezemonkhai]

I suppose if one thinks a house is losing value then it can be best to sell if the evidence is that it will fall substantially further.

Also if the value is less than the mortgage then it seems logical to stop paying the mortgage, putting good money after bad, declare oneself bankrupt, rent and then start working to a fresh start. This is what millions have done in Ireland, USA and other places where property prices crashed. Let the banks take the hit as they are also largely responsible for the property bubble.

But if you try and do that in the UK, then you still owe the debt, even when the bank takes your house, they can chase you for the rest of the money.

It's a fundamental difference between the US and UK.

In the UK the only way out is bankruptcy, but even then they can probably take a large chunk of any wage you get as part of the settlement.

[preston334]

"A complete re-wire after 20 years is a strong possibility "

Why would a property need a rewire after 20 years. I've have carried out periodic inspections for landlord certificates and one property is 40 years old and is as good as the day it went in

Also who to say the landlord will carry out repairs/modernise properties. Even councils/housing associations are not known for their rapid responses to carrying out essential repairs etc. always in my book better to carry out the repairs yourself. At least you know the job is done right 1st time rather than a quick bodge

['daiking']

Yeah and? What has this got to do with buying or renting?

Buying will cost slightly more short term for maintenace etc (as i replied earlier to another post) but long term as i have said about a million times now after the mortgage has completed i will have an asset and be paying no more monthly payments......seemingly this is still too difficult for some people to fathom

This had gone on far too long now and going round in circles and i still haven't had an answer......

Unsubscribing as i am really bored now and you have no real answer as to why you are both adamant that renting is better. :wall:

Opportunity cost is what make own you own home outright and living in it rent free, what did you call renting? Dead money. A home is a commodity and however you do it, it costs you money. In investment terms and I gather you think a house is a good investment, there is always somewhere else you could better invest your money. Instead there is an emotional attachment to the intangible benefits of owning despite the investment (which should be logic not emotion) rhetoric.

In your rent vs buy comparison (I don't think it merits the term analysis) you've presented the best and worst of both worlds. In terms of buying, you've projected your current mortgage rate good fortune, you've ignored the likelihood of changes in those rates, ditto transaction costs over that time. Then, as has been mentioned by others, buying takes responsibility for the upkeep of the house and also the vast majority of owners are minded to change the property to their own tastes. Both of these are not negligable costs. Lastly the stickiness of the market, where it is difficult to change if you need to move, as well as the transaction costs I've highlighted.

In renting terms you've highlighted the cost but ignored all the benefits. It is effectively a fixed cost, no repairs, no upkeep, no large bills out of the blue. Transaction costs are much lower which gives you far greater flexibility to upsize, downsize, change location etc. Also your commitment is likely to be much shorter, typically 1 yr rather than the remainder of the mortgage. The lack of tenure is cited as a major problem but it is something you need to work in your favour rather than be crippled by it.

To compare the 2 you need to think about much more than just the initial monthly cost - a rather short sighted move. A 25 yr old with 15k in his/her pocket has much to think about. After paying for things associated with buying, that buyer would be lucky to have a 10% deposit left if they're satisfied with living in the sort of area where houses cost that. They would struggle to get the sort of finance deal, you or I would have benefitted from in 2005-07. Ongoing they would be at the vagaries of the banks and wouldn't drop to a 2.5% deal in the future. Did you know that the Nationwide and Lloyds TSB changed their terms in the aftermath of 2009 to prevent new customers dropping onto to their legacy SVR. So from a finance point of view, things aren't looking rosy

One thing that might help is an increasing market in the short term to increase equity. Are you feeling brave? So our young buyer has trouble in getting affordable finance over the next couple of years, will probably be looking at moving in 5 or so years which would mean extra transaction costs and a lot of hope. Also what does this 25 yr old do? Are they settled? Job security? Life plans? The housing Market is sticky to enter and sticky to change or leave. How far can they stretch? Next up, if they spunk all their money on buying the house, will they manage with any potential bills that may come their way? Still stretching? All that against the back drop of the current financial situation...

So do you buy as soon as you can, put on your optimistic head and hope for the best or pay some rent, fix your costs and prepare to buy once and do it right?

[mdon]

If you don't mind me asking, what have you have to show by owning your property?

Let me explain the question.

If you need access to money, considering that you just paid off your property and the value is..let say £100K, how much money you can get now, or in the next 2 days?

My scenario:

I've sold just before the prices took a dive. Stashed £72k in the bank. Since then I moved them around, some stock etc. If I need to liquidate now, within 3 to 5 days I could put my hands on something like £100 K CASH.

How about you? Even if you sell it will take several mouths, for me...I could have them by the end of the next week.

So...you are property rich but nothing else. I rent a flat but I am cash rich....it is a huge difference.

Some people say: "My property is my retirement" How come??? Is your house going to pay you a dividend or something???

The only option for you to make your house to work is to sell and downgrade giving yourself cash to live from.... For me... I could still rent the biggest place than you, paying the same amount of money.

I am not having a go on you or anyone else, I'm just showing you the flip side of the coin.

Why would anyone need 100k? I'm with JWR, I own (mortgaged) a large three story Victorian town house, my mortgage payments are now £286 pcm, I could have it paid off in ten years (I'm 29 at the moment) if the government doesn't mess with final salary pension schemes too much I'll retire and with the state pensions should be receiving £23k ish per year on todays pay plus my lump sum, I won't have any mortgage etc to pay as it will all be paid off so I won't have to budget for rent etc and my children will have a nice inheritance from the house.

Your 100k will reduce in money value year on year, you'll have to pay rent for the rest if your life which assuming you live for another 50 years is a lot of money (you could have bought two houses in that time) and you'll have nothing to show for it, if you want to alter your flat to add more room to a bed room/ensuite you can't, if you want to decorate, you can't without permission if you want a pet you need permission.

Sorry but renting is dead money, I would get more enjoyment from burning all my cash in the garden rather than renting.

Edited 27 March, 2012 by mdon

[mdon]

JRW,

Whilst I can see how you come to your "understanding" it is very simplistic. What you haven't built into your 25 year ownership are repairs and maintenance. For example:

1 or 2 new central heating boilers

2 or 3 new hot water tanks

Couple of new radiators

Other plumbing repairs.

A complete re-wire after 20 years is a strong possibility.

External repainting

External repairs

Boundary repairs

Plus as the owner you are responsible for the bricks and mortar insurance.

It may not sound like a lot, but you would be surprised how these small things start to add up. And this is for a house built in the last five years. You start looking at houses built in the last 20 years and the costs can rise even further.

Note, I'm not saying you are wrong or right, just that these are things you don't seem to be taking into account. I know of several couples who have reached their 60's who have sold up their large family homes, moved into smaller, often newer rentals, and are living off the proceeds very nicely.

Depends how handy you are, I've got a house built in 1880, I've lived here a little over three years (my first house I've bought, I rented before this) I've just re-wired it myself, will probably need a boiler in a couple of years ( about £1800 all in) the house is solid sandstone so not much paint. Rent is factored to pay the properties mortgage and any bills, No. 10 at the end of my street has been rented for £550 PCM for the last 3 years that I know of, my mortgage was £415 when it was fixed at 5.odd % it is now and has been for over 12 months £285, that £265 PCM I'm better off by buying will pay for any repairs and cover the building insurrance of £15 PCM.

Edited 27 March, 2012 by mdon

[mdon]

"A complete re-wire after 20 years is a strong possibility "

Why would a property need a rewire after 20 years. I've have carried out periodic inspections for landlord certificates and one property is 40 years old and is as good as the day it went in

Because standards have moved on ie trip boxes, RCD's which now you have to have two fitted. The 2.5mm twin and earth gets very brittle with age so I would always re-wire after a max of 30 years.

True about landlords not carrying out maintenance though, the last place I rented still had wiring from the 60's, the type that just had the two cores insulated and twisted around each other, no additional insulation and still had the Bakerlite switches.

[Padrino]

So you are living in large three story Victorian town house and paying £286 per month? On current going rent it means that your mortgage is £100K and you are 29 years old.... Either you had very big deposit for the above mentioned house or the properties in your corner of the world are cheap as chips.

Even if you bought your house 3 years ago with 10% deposit down the market value of your large three story Victorian town house is only £110K???? Something is not right here, I think you should give us the whole picture.

[mdon]

So you are living in large three story Victorian town house and paying £286 per month? On current going rent it means that your mortgage is £100K and you are 29 years old.... Either you had very big deposit for the above mentioned house or the properties in your corner of the world are cheap as chips.

Even if you bought your house 3 years ago with 10% deposit down the market value of your large three story Victorian town house is only £110K???? Something is not right here, I think you should give us the whole picture.

I bought it in a poor state of repair, for £85k. I paid a 15% deposit. And I took my mortgage over a 30 year deal, I have spent approx £6k doing it up with new carpets, bathroom, decorated, re-wire and new roof on the extension. The properties around here are cheap No. 1 is now up for sale £129k so I've made money on my house and since the house prices have held static for the past 3 years i higly doubt i will loose money. I have 67k left oweing, worst case senario I'll be paying that off until I'm 56, but because I'm saving so much by not renting I am able to save a minimum of £650 per month so I hope to pay it off quite a bit early.

From my situation you can see that there is no way I would ever be better off renting.

[Padrino]

You have done very well for yourself. I wish that I could find the same property in my corner of the world for this kind of money, then I will buy for the only reason to sit on it for several years and sell it. £89K for large three story Victorian town house..people couldn't even dream around here for such a price :sun:

[mdon]

You have done very well for yourself. I wish that I could find the same property in my corner of the world for this kind of money, then I will buy for the only reason to sit on it for several years and sell it. £89K for large three story Victorian town house..people couldn't even dream around here for such a price :sun:

You can get some of the really big ones for not much more than £100k there's a 5 bed 4 storey town house on for o.i.r.o. £99,950 obviously needs a bit of work done to it but nothing too much. I can understand renting in expensive areas ie cities however where you can get decent size houses for less than £120k then buying really does make sense!

[preston334]

Because standards have moved on ie trip boxes, RCD's which now you have to have two fitted. The 2.5mm twin and earth gets very brittle with age so I would always re-wire after a max of 30 years.

True about landlords not carrying out maintenance though, the last place I rented still had wiring from the 60's, the type that just had the two cores insulated and twisted around each other, no additional insulation and still had the Bakerlite switches.

These regulations are just a big con in my opinion. I rewired my dormer bungalow in 2005 to 16th edition regs then along came 17th edition and now in theory I should be changing to a 17th edition board. Boss mention this to the NICEIC inspector doing our annual assessment and he told us there no need to recommend a change. Only an advisement required if any major works being carried out IE a extension, any circuits being added/modified. We just rewired 3 sub stations in November and December last year using metal trunking as per 17th edition regs. Due the amendment now to 17th edition regs those installations no longer adhere to the 17th edition. Most of these amendments seem to stem from manufacturers in order to sell their products