# Buying vs Renting



## adeel43 (Dec 17, 2008)

Myself and my wife seem to never have enough money left over each month to save and get a deposit together to buy our own place. 

I earn decent money but she is a stay at home mum - we live in London which doesnt make things easier as rent is so high amongst other things and have two young children. 

Is renting really the end of the world or should we be finding the money to save a deposit even if it takes 10 years to do it?


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## Silver R26 (Jul 19, 2008)

Depends on how much you want to move out. If you don't mind living were you are then if I was you I would save. Its really down to what you want.


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## The Cueball (Feb 8, 2007)

I currently have a bought house...

I am selling and moving into a rented place ASAP...

Fed up with wasting money on something that is never really 'owned'...

I am looking forward not caring about the roof leaking, the cooker breaking, the heating not working... all someone elses problem!

Much better things to waste my money on!!! 

Just an example, I have a friend that has a lovely house, but can't afford to do much else (but he was forced into buying into a certain area by his wife...a real fur coat and no knickers new build development), so when I am away on another trip, buying another car/suit, or out living my life, he is stuck at home in his brick prison...sending me requests for pictures and updates...

I feel really, really sorry for him - what a waste of a life!

:thumb:


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## Nanoman (Jan 17, 2009)

*£200000 house - buy it*
£20000 deposit
£930 monthly mortgage = £334800 cost over 30 years mortgage payments
Total cost is £354800 + associated costs of owning a home BUT you have a house which is going to be worth £200000+ appreciation/depreciation

*£200000 house - rent it*
Rent £950 per month
Total cost is £342000 and you walk away with nothing.

Using the above sums it looks like you're better to buy than rent although that is based on a quick look at how much it costs to rent a house worth roughly £200k around here.


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## The Cueball (Feb 8, 2007)

grantwils said:


> *£200000 house - buy it*
> £20000 deposit
> £930 monthly mortgage = £334800 cost over 30 years mortgage payments
> Total cost is £354800 + associated costs of owning a home *BUT you have a house which is going to be worth £200000+ appreciation/depreciation*
> ...


Maybe.... and after what has just happened, it's now a real gamble....houses are WAY overpriced and the UK can't go on the way we are (IMO)......

:thumb:


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## wookey (Jul 13, 2007)

swings and roundabouts....

Normally comes down to cost though. Obviously buying a house is best in the long run, but if renting is a short term stepping stone then I wouldn't worry too much.

Although, say £800 per month is your budget. With that you could either buy a not such a great house in a bad area or rent a nice house in a nice area- I'd rather rent the nice house in a the nice area, than buy a not so good house in a bad area


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## The Cueball (Feb 8, 2007)

wookey said:


> Obviously buying a house is best in the long run


I'm curious as to why you think that?

:thumb:


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## Adam D (Nov 3, 2009)

The Cueball said:


> I'm curious as to why you think that?
> 
> :thumb:


If you only have one house then it is classed as your primary residence and you will not pay CGT on it when/if you come to sell it.

Housing has been one of the best performing asset classes over most 15/20/25 year periods (any shorter than this and you run the risk of buying in a peak and selling in a trough, not good news).

It is a sort of forced way of saving.

I hope that when I am older my children will have decent jobs and then my wife and I can downsize and live a LOT


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## Gids64 (Mar 20, 2009)

I think buying a house or flat is the long term better option, purely because you have an asset at the end of the mortgage. If renting suits you and you can still manage to save some money for a rainy day then that's great. But if buying is at the back of your mind then have a look around at what's about, you never know you might find something that's perfect. But one things for sure if you don't look and keep abreast of whats going on you could just miss out on that property that ticks all your box's.


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## wookey (Jul 13, 2007)

The Cueball said:


> I'm curious as to why you think that?
> 
> :thumb:


When you come to retire can you afford to keep paying rent for another say 30 years?

When I retire I want my house to full paid for and will hopefully have another couple of properties rented out also paid for.

Property will be my pension


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## adeel43 (Dec 17, 2008)

I think the biggest issue facing us is that where we live 200k will really only buy you a 2 bed flatand prob not a nice one at that. we currently rent a 3 bed house and it costs £1200 a month (rent a room to by brother to help with the rent). I would love to own a place but just find it next to impossible to find money put to one side each month to save any kind of deposit money.


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## Silver R26 (Jul 19, 2008)

The Cueball said:


> I currently have a bought house...
> 
> I am selling and moving into a rented place ASAP...
> 
> ...


I know some people are live for the moment rather than plan for the long term, I am quite the opposite, neither is right or wrong just different opinions on life.

If you aren't gonna buy what will you do when you retire, where will you live?


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## The Cueball (Feb 8, 2007)

Adam D said:


> If you only have one house then it is classed as your primary residence and you will not pay CGT on it when/if you come to sell it.
> 
> Housing has been one of the best performing asset classes over most 15/20/25 year periods (any shorter than this and you run the risk of buying in a peak and selling in a trough, not good news).
> 
> ...


You will always run the risk of negative equity, I know a few people that have done "all the right" things, bought at the right time, had a house for decades and now, at retirement age, they have next to nothing left....although the stock markets have played their part too...

I would not gamble my retirement on an 'asset' that other people control the price of...

Each to their own and all that, but as with anything, there is not a right way and a wrong way to do things...

:thumb:



wookey said:


> When you come to retire can you afford to keep paying rent for another say 30 years?
> 
> When I retire I want my house to full paid for and will hopefully have another couple of properties rented out also paid for.
> 
> Property will be my pension


Where does your 30 years come from? I will not live that long...see my post here, number 13

:thumb:


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## Simmo (Aug 31, 2008)

also depends what age your planning to retire.


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## Adam D (Nov 3, 2009)

The Cueball said:


> You will always run the risk of negative equity, I know a few people that have done "all the right" things, bought at the right time, had a house for decades and now, at retirement age, they have next to nothing left....although the stock markets have played their part too...
> 
> I would not gamble my retirement on an 'asset' that other people control the price of...
> 
> ...


If at the end of a 25/30 year mortgage term you are facing negative equity then the economy is in big pooh. And anyway, it may well be negative equity, but as long as you have paid off all of the capital then the house will be yours and not the banks/building society's (this assumes that you have not gone interest only, which seems like a good idea at the time to shave a wee bit off your monthly payment, but not good news when you have not been putting any money aside to pay off the capital at the end of the term).

Personally speaking, my retirement does not solely rely on my house I also have a pension to pay that I pay into. I would never put all of my eggs in one basket.


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## Adam D (Nov 3, 2009)

The Cueball said:


> Where does your 30 years come from? I will not live that long...see my post here, number 13
> 
> :thumb:


I thought that was the answer.

I agree with you on this one:thumb:


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## The Cueball (Feb 8, 2007)

I'm not trying to force my rather bleak view of life and death onto people.

I'm glad most of you have figured out a plan for yourself and your family...

To the OP, that is the real answer to your question - *Only you can decide what is right for you and yours!!*

Just remember people, the ecomony crash is on a cycle - it will crash again, and again, and you need to try and avoid it when you are about to retire!!!

:thumb:


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## Avanti (Jan 17, 2006)

grantwils said:


> *£200000 house - buy it*
> £20000 deposit
> £930 monthly mortgage = £334800 cost over 30 years mortgage payments
> Total cost is £354800 + associated costs of owning a home BUT you have a house which is going to be worth £200000+ appreciation/depreciation
> ...


When the markets were good, it would have been better to rent and invest than buy, my mortgage is next to nothing now and almost completed, but as others have mentioned there is the maintaining of the property etc.
A previous GF was in a similar position to me with almost completed mortgage, she wanted us to get a place together which would practically men we could have a 'bigger better house' mortgage free , I didn't fancy a move from my area and once she took the plunge and got a bigger mortgage the disposable income soon vanished and the holidays and life's enjoyments etc stopped so we soon finished. 
Even when my mortgage is finished I may just take out loans etc as when I die the value of the house will only benefit whoever gets the estate


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## Adam D (Nov 3, 2009)

The Cueball said:


> I'm not trying to force my rather bleak view of life and death onto people.
> 
> I'm glad most of you have figured out a plan for yourself and your family...
> 
> ...


Very true Cueball.

Economies will always crash at some point. Forget Nu Labour's promise about the end to boom and bust.

The secret is to not get too greedy and as you get close (within a few years or so) of a specific date when you want to realise your cash then you start selling up your more risky/price volatile assets and put them into something less boring, but more price stable.

Don't worry, I don't consider you that much of a doomer, more a pragmatist


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## mwbpsx (Jun 23, 2006)

The Cueball said:


> I'm curious as to why you think that?
> 
> :thumb:


Simple. You invest in property, prob about the same monthly you pay in rent (London), your property increases in value, at retirement you sell up and rent, spend the profit on yourself :thumb:

Until you get divorced and lose it all at 45 :wall:

Mark


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## justina3 (Jan 11, 2008)

as already mentioned only you can decide on your situation, for me I would and did buy I now have several properties 5 mortage free which when the market picks up will be shrinking down to 5 all mortgage free. 

Rental for me is something that goes against the grain I am quite happy to let someone else pay my mortgage.


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## Adam D (Nov 3, 2009)

justina3 said:


> as already mentioned only you can decide on your situation, for me I would and did buy I now have several properties 5 mortage free which when the market picks up will be shrinking down to 5 all mortgage free.
> 
> Rental for me is something that goes against the grain I am quite happy to let someone else pay my mortgage.


Hello Justin,

What is the difference between "5 mortgage free" and "5 all mortgage free"?

I can understand that HPI movements will put you in and out of negative equity, but it will not pay off your capital outstanding.

Adam


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## Avanti (Jan 17, 2006)

Adam D said:


> Hello Justin,
> 
> *What is the difference between "5 mortgage free" and "5 all mortgage free"?*
> 
> ...


I read it as he has more than 5 properties and of those 5 are mortgage free, when the market picks up he will lose the mortgaged properties.


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## Adam D (Nov 3, 2009)

Avanti said:


> I read it as he has more than 5 properties and of those 5 are mortgage free, when the market picks up he will lose the mortgaged properties.


Sorry, my bad.

Just in my lingo several is less than 5.

Your explanation sorts it out


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## Puntoboy (Jun 30, 2007)

adeel43 said:


> Myself and my wife seem to never have enough money left over each month to save and get a deposit together to buy our own place.
> 
> I earn decent money but she is a stay at home mum - we live in London which doesnt make things easier as rent is so high amongst other things and have two young children.
> 
> Is renting really the end of the world or should we be finding the money to save a deposit even if it takes 10 years to do it?


I'm in the same boat mate. Don't earn enough to get a deposit together so forced to rent. It's quite annoying as I really want my own place so I can make my mark on it without worrying what the landlord will say.

We move house in a few weeks to a brand new built detached house costing us £650 a month. Make me cry knowing that some people I know pay half that for a mortgage and it's there own house.  But there isn't anything we can do. Just put away as much as possible and eventually we'll have a deposit (or one of our family members will die and we'll get a good pay out from that) lol (a bit morbid I know)


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## adeel43 (Dec 17, 2008)

Know exactly how you feel, we are going to have to move again in June as my 'lodger' wants out so back to a flat in South London costing over £900 a month + bills. Looking for a better job as that seems to be the only way to have money left over to start saving.


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## Renmure (Jan 18, 2007)

I think a lot of it is a state of mind and social attitude. In the UK there is an aspirational view that owning ones own home is something to be achieved and looking to rent is somehow less astute and less of an achievement. In Europe and the US the housing market is far more orientated towards renting and there is far less stigma attached to folk who want to rent for whatever reason and far less kudos given to anyone who wants to buy a home. Personally, I am a home owner because buying best suited me at the time and nothing has happend to change that. However, I also own various properties which I rent out to others and am sure that these renters are doing the right thing for them. Obviously in the medium/long term as landlord I make money out of folk renting, but they also gain in the relationship by having somewhere to live that they are not tied to, have less responsibility for, and have as much or as little security of lease as they want or need. Thats what they are paying for. 

On the financial side of it, a lot of home owners (until recently perhaps) tended to frown at folk wanting to rent whilst look at themselves in a smug way at how clever they had been by buying property and seeing their paper wealth increase... without giving much thought to the fact that they probably couldn't actually afford to buy their own house based on their existing salary if it weren't for house price inflation giving them equity.


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## Avanti (Jan 17, 2006)

Renmure said:


> *I think a lot of it is a state of mind and social attitude. In the UK there is an aspirational view that owning ones own home is something to be achieved and looking to rent is somehow less astute and less of an achievement.* In Europe and the US the housing market is far more orientated towards renting and there is far less stigma attached to folk who want to rent for whatever reason and far less kudos given to anyone who wants to buy a home. Personally, I am a home owner because buying best suited me at the time and nothing has happend to change that. However, I also own various properties which I rent out to others and am sure that these renters are doing the right thing for them. Obviously in the medium/long term as landlord I make money out of folk renting, but they also gain in the relationship by having somewhere to live that they are not tied to, have less responsibility for, and have as much or as little security of lease as they want or need. Thats what they are paying for.
> 
> On the financial side of it, a lot of home owners (until recently perhaps) tended to frown at folk wanting to rent whilst look at themselves in a smug way at how clever they had been by buying property and seeing their paper wealth increase... without giving much thought to the fact that they probably couldn't actually afford to buy their own house based on their existing salary if it weren't for house price inflation giving them equity.


You can thank Maggie and crew for that, i remeber in the 80s when there was a fad on buying houses , and the 'world' went very materialistic.


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## Renmure (Jan 18, 2007)

Avanti said:


> You can thank Maggie and crew for that, i remeber in the 80s when there was a fad on buying houses , and the 'world' went very materialistic.


Not at all. It was always thus. The 1980s made it easier for folk who previously had NO choice to have a choice. Not everyone made a wise choice.


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## Gruffs (Dec 10, 2007)

renting is not all bad.

As long as you are prudent and choose wisely, renting can be financially beneficial. You need to rent the smallest property you can possibly get away with (unless it's like ours) and SAVE like mad. Moving far enough away from your family and friends to make popping to the pub a pain but not so far as you can't get home in an hour helps too. 

And, the maintenance is the landlords problem. Though i do keep it nice as i want my deposit back (i hate giving money away for the sake of a bit of cleaning or painting).

We did really luck out with ours though.


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## Roswell (Aug 11, 2008)

simple way to work it out, if cheaper to rent rent, if cheaper to buy then rent buy, re evaluate yearly job done. remember once you buy you have a set debt with generaly a set cost , rents will always go up over time so long term your better off buying but buying at the right time makes all the differance.


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## stangalang (Nov 27, 2009)

to be very general about this it is well worth struggling to get on the property ladder as as already stated all other things equal it isn't that much cheaper to rent than it is to buy, but at the end a renter has zero to show for it. That said my tennents have a much less stressfull life than me and in the real world if they dont pay me i still have to find the money to cover. Boiler, washing michine, leak? All my problem, maybe. But they are paying my mortgage so ultimatly i laugh last. If you can get money together some how do it. My biggest tip though is buy with your head not your heart, remember you dont own the house till its paid for, the bank does, you sell it they get the money not you, you get whats left over, and if there isn't anything you get a bill. Buy smart it makes more sense than renting IF its possible


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## Renmure (Jan 18, 2007)

Roswell said:


> simple way to work it out, if cheaper to rent rent, if cheaper to buy then rent buy, re evaluate yearly job done.


:lol: at the "re evaluate yearly"
It is easy to change address on a yearly basis with a months notice if you are renting and at no cost. Costs a fair bit to sell a house and takes a bit of time to do.


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## The Cueball (Feb 8, 2007)

Renmure said:


> :lol: at the "re evaluate yearly"
> It is easy to change address on a yearly basis with a months notice if you are renting and at no cost. Costs a fair bit to sell a house and takes a bit of time to do.


Not to mention the massive cost to your "credit score"...

Changing things like homes and jobs on a regular basis is a really bad idea in this country....if you need credit!

:thumb:


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## robertdon777 (Nov 3, 2005)

I bought a house rather than renting, but thinking about it logically it's probably better to rent.

BUT only if you save the extra money you are saving on the lower rental price of the house compared to mortgaging the house.

So if a 200K house is 1K (+ repairs etc.) to buy but only 700(will increase in time) to rent make sure you invest the 300 every month and in theory you should be very well off in 30 years time (cash wise & cash is king!)

The only problem with this and why I decided to buy is having the ability NOT to spend the extra money! If I had started like this (renting + saving) 10 years ago I would have a pot of cash worth about 36K, I don't though - but I do have approx 40K in equity in the house, so it is swings and roundabouts. Sometimes it would be nice to look at the cash though rather than a mortgage statement


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## DiscoDriver (Oct 27, 2009)

I've found this thread very interesting to read. I think that perhaps renting would seem like a more possible idea to me if there was greater availability of suitable housing to rent (for me it would be 4 bed houses either detached or semi) than there currently is. An equivalent house to what I currently own (sorry, rent off the bank aka a mortgage) would cost virtually the same as what I currently spend on the mortgage (and that's on a repayment basis, not interest-only), especially if I want to live in a nice area which we do at the moment. Hence, renting seems like a waste.


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## robertdon777 (Nov 3, 2005)

Yeah it gets complicated if you already own a house, because of the price rises that usually happen to the housing market.

If you are starting out though the figure for rent is usually much lower than that of having a mortgage to purchase the house, remember you usually need a good deposit aswell for the mortgage. At the moment I think renting would be a very good option for someone looking to move out of say their parents house. It should allow them to have enough spare cash to still live and save - which are very important.

I personally think its got much more difficult for people to buy than say 10-15 years ago. I consider myself lucky to have got on the ladder 10 years ago because if I was looking to buy now I couldn't afford the house I live in now!


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## Renmure (Jan 18, 2007)

DiscoDriver said:


> I've found this thread very interesting to read. I think that perhaps renting would seem like a more possible idea to me if there was greater availability of suitable housing to rent (for me it would be 4 bed houses either detached or semi) than there currently is. An equivalent house to what I currently own (sorry, rent off the bank aka a mortgage) would cost virtually the same as what I currently spend on the mortgage (and that's on a repayment basis, not interest-only), especially if I want to live in a nice area which we do at the moment. Hence, renting seems like a waste.


When you get to the stage of looking to buy/rent something like a 4/5 bed house then most of the foregoing advice goes out the window really. Most landlords don't really buy these properties as single letting investments but rather as multipe occupancy type accomodation. I rent out a 5 bed townhouse but do it as 5x £250pcm to students (ie £1250/month) where as the maximum realistic rent to a family for that area would be circa £700ish. Most of the residential 4-5 bed houses available will be let through an agency, usually for an owner who is working abroad/away but does intend to move back in the future. They are usually less concerned about maximising the income rather than getting the right tenant so it can be possible to get an nice place for a good price but the payoff is usually the insecurity of knowing that your lease isn't as likely to roll over as long as you want it to as it would be for a more "commercial" letting.


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