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Would you rent or buy a house at this present time?

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A_man_called_CHIOG  Male  South East London 13-Feb-2020 07:48 Message #4770476
You have the money for a deposit. Would you buy or use it to rent?
Topaz53  Female  Northamptonshire 13-Feb-2020 09:55 Message #4770485
My son split up from his partner and with the money from his house did buy a new build.

He is actually paying much less on his mortgage than he would do on a rented property.

I think mainly, if the younger generation have the deposit, they would opt to buy, because the pros outweigh the cons, in my opinion.

For some, it's getting that deposit in the first place.

Have you rented or bought your place
Tramontana  Male  Greater Manchester 13-Feb-2020 10:16 Message #4770486
I would buy, but buying is always a longterm investment, and its quite possible that in the short term it could in fact become negative equity.

Work situations are very much fluid these days, and no one should expect a job for life. If I had to move to another area for work reasons, I would then rent a new property, whilst renting out the previously purchased property.
wonderoushen  Female  Gwynedd 13-Feb-2020 11:03 Message #4770496
What Tram said depending on how long I was expecting to be away for, otherwise I'd buy, I've lived in so many rented houses over the years and its got less secure and more expensive over the years, agents rip you off and always seem to find a way making sure the tennant is in the wrong. I also think agencies are a large part of the cause of massive and unaffordable rent increases, well estate agents are rather than old fashioned rental agencies, I was looking in the windows of both the other day and and the price difference was anywhere between £100 and £300 for very similar properties.
HonestBob  Male  the Central region 13-Feb-2020 13:13 Message #4770509
Buy! Buy all day every day!

I have a 3 bed house with driveway, garage, gardens and the mortgage is less per month than my mums two bed flat two streets away!
Hierophant  Male  East Anglia 13-Feb-2020 13:22 Message #4770511
Absolutely, buy! - one of my biggest regrets in life is not buying a home when I should have and wasting the money on other things.
Now, it's probably too late...
BOYDEL  Male  Surrey 13-Feb-2020 14:15 Message #4770517
Anyone with the opportunity to buy should usually do so asap - simply because the cost of rent during an adult lifetime of say 60 odd yrs will be 2 or 3 times the cost of servicing say a 95% Repayment Mortgage.

Many people who end up in rentals once retired - will find that the Govt literally tells them where they can live - and that could well be in the most deprived locations in the UK.

Reason being that LHA (Local Housing Allowance) does not cover even the cheapest rents in 95% of UK locations.

That would especially disadvantage anyone living in London/SE or any other expensive location.

From age 35 onwards a childless singleton/couple get just the 1 bed rate of LHA which by definition varies radically by postcode (rates are online for each postcode for those interested)

Currently London FTBs pay just 20% of gross household income to service their mortgages (£1000 pcm) but they have gross household income averaging £60k and av £100k deposit and borrow £228k.

Average Private Rent across Greater London is around £1600 pcm

Mortgage interest rates are on the floor - meaning that even in early years of a Repayment Mortgage a far bigger portion of the monthly cost goes to down pay the capital.

In Midlands/North gross rentals yields in private sector are far higher than in London/South - hence often far cheaper to buy rather than rent - even with say a 95% mortgage.

DCLG say that 75% of FTBs are couples - suggesting it's easier to get a higher loan with 2 incomes of course - esp if neither partner earns much individually.

MMR since 2013 does stress test new mortgages at a 7% Repayment mortgage rate to maintain long term affordability.
BOYDEL  Male  Surrey 13-Feb-2020 14:28 Message #4770521

Since June 2019 Letting Agents were banned from charging fees to prospective Tenants - and Landlords also can now only charge a max 5 weeks rent as security deposit (formerly 6 weeks).

The costs of vetting Tenants at outset thus fall solely on Landlords.

Average duration of a Private Tenancy is now 4.5 yrs and around 85% of Tenants leave of their own accord.

Private Rental remains of course less secure than social housing or home ownership - though latter is often out of reach of those on low pay who cannot save a decent deposit - nationally average FTB has a 17%/£24kdeposit and a gross £38k household income - though 75% are couples.
BOYDEL  Male  Surrey 13-Feb-2020 14:52 Message #4770534
One small caveat CHIOG would be any single person should try to buy at least a 2 bed property - so if finances get strained there is potential for a lodger.

The first £7500 pa of income from lodgers is also tax free. So even with no need for a lodger you could pay down the mortgage even quicker than today's low mortgage rates allow.
wonderoushen  Female  Gwynedd 13-Feb-2020 19:02 Message #4770572
Boydel, agents still manage to rip you off, despite what the law says, they manage to interpret to suit them and thier profit margins.
BOYDEL  Male  Surrey 13-Feb-2020 19:59 Message #4770578
Please elaborate Hen as Letting Agents now have no financial involvement in charging Tenants directly - though clearly a Landlord can within legal constraints tell Agent what kind of Tenant they want or don't want.

The obvs barrier is benefit tenants given that LHA does not cover full rent in 95% of UK locations.

Tenants with pets esp dogs will usually struggle to find a place - and Govt has made that more difficult by limiting security deposit to just 5 weeks rent - which is clearly no use if an incontinent dog has peed over every carpet in say a 3/4 bed house and replacement cost is in thousands.

Every study so far around Universal Credit has shown it leads to more rent arrears.

In general a Landlord will want to see a working tenant where the Rent is no more than 30/40% of gross income as well as Tenant having a good credit record - conversely the nightmare scenario is say a lone parent benefit claimant who will usually prioritise kids' welfare over rent payment - even if that risks eviction and Council saying it was Intentional Homelessness.

Individual Landlords will have their own preferences around preferred Tenant type based on past experience.

Nobody can book in to a hotel and say they will pay at the end of the month (you get credit card swiped at Reception on arrival) - but that is what Govt expects private Landlords to accept with benefit claimants eg rent a month in arrear with no g'tee of it being paid at all as the rent money goes direct to claimant who may well spend it on other things.
RobM  Male  Essex 13-Feb-2020 21:11 Message #4770584
I used my redundancy pay-out to clear my mortgage. No rent in my non-working years. Worked for me.
A_man_called_CHIOG  Male  South East London 14-Feb-2020 08:12 Message #4770621
I’ve bought Topaz but it is a struggle.
A_man_called_CHIOG  Male  South East London 14-Feb-2020 08:15 Message #4770622
BOYDEL. I replied to Topaz before reading your post. You’re right about the need for a lodger or house share especially with London prices.

Topaz53  Female  Northamptonshire 14-Feb-2020 11:46 Message #4770667
Good on you CHIOG....Yes it can be a struggle....
High mortgage...low wages.

My son thought the same about a lodger....

I actually have more of an in income than him and have no mortgage.
Topaz53  Female  Northamptonshire 14-Feb-2020 11:48 Message #4770668
Forgot to mention a valid point....
My mortgage was only paid off when I took medical retirement in 2015
Tramontana  Male  Greater Manchester 14-Feb-2020 11:58 Message #4770673
´I’ve bought Topaz but it is a struggle.´

Can MSE members actually be bought??
Hierophant  Male  East Anglia 14-Feb-2020 13:53 Message #4770681
Everybody has their price.
Have you seen the price of topaz lately though?....
brisinger  Male  Lancashire 14-Feb-2020 14:04 Message #4770683
I would buy as an investment simply because the value of it isn't usually counted as capital in most, but not all cases when the government and some other financial bodies are involved. It is usually counted as outgoings rather than income.
brisinger  Male  Lancashire 14-Feb-2020 14:11 Message #4770684
Since my mother has Alzheimer's, me and my brother have toyed with the idea of a twin-share mortgage so that we could move close to them to ease the strain but rent out the main property in order to keep it as an asset rather than capital per se.
Tramontana  Male  Greater Manchester 14-Feb-2020 14:17 Message #4770685
´Everybody has their price.
Have you seen the price of topaz lately though?....´

If CHIOG has made the purchase, then surely she is off the market now? Or is there still a possibility to gazump?
BOYDEL  Male  Surrey 14-Feb-2020 14:44 Message #4770687
If that involves you owning a second property then you get in to the realms of the 3% SD surcharge and of course CGT on a sale - though it is unclear what exactly you were proposing with your brother.
Unlike standard rates of SD - the second home surcharge is applied to total purchase price - so on say a £300k property SD goes from £5000 to £14000
Colonel_Blink  Male  Buckinghamshire 14-Feb-2020 14:59 Message #4770688
It shows the importance of professional advice on anything involving large sums of money.
BOYDEL  Male  Surrey 14-Feb-2020 15:14 Message #4770691
Yep - esp if one is trying to get an elderly parent in to say a Council funded Care Home where LA will look very carefully for any evidence of "deprivation of assets" after the deterioration of health.

I know a woman who got away with that by putting her property in trust for her daughters - but by the time she was desperate to enter a Care Home there was then a 3/4 year delay in finding a home willing to take her on as she had multiple nursing needs.
Topaz53  Female  Northamptonshire 14-Feb-2020 16:22 Message #4770697
What can I say...
Glad that I've kept you all amused and secondly .....


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