The rush for home ownership - is it just us? (ie. the UK)

[Matt..]

Are there many other countries in the world where once you finish education, there is a big rush for buying a house, and if you don't buy one, you feel left out? Are we the only country with this obsession for ownership over renting?

It all seems a little crazy really. No wonder half the country is miserable, as they're all stuck somewhere they don't want to live, and either saving like mad, or paying for a house they can't afford Maybe we should promote renting more!

[TheEnd]

I think so, I've heard that France and Germany tends to be more centered around renting.

[ghamer]

Possibly,but I don,t think its a bad thing.Lets face it even if you are renting someone has to own the house.I grew up on a council estate at 18 I bought my first prop a small terraced.I now live in a farm house with over £300k equity in it.If I rented from day 1 I would be in a less favourable position.

[cjs]

It is a myth that 'Europeans' don't buy property.

[Hackney]

There seems to be much less pressure to "get on the ladder" in Europe.
A much higher proportion of property is available to rent, so the market is more competitive and therefore cheaper.

Rents are very high here (speaking as a London renter)

There's also a higher level of living with the family, in the family home for longer.

This country has been caught up in buying as an investment rather than a home; and trading up for money rather than need.

The "I made £60k on this house I bought for £140k a year ago" mentality. True, but every other house in the street / area went up at the same time.

[Qcarchoo]

Renting is fine but what happens when you reach retirement age and your income is drastically reduced?

[Simpo Two]

Seems to me that you can spend a chunk every month on rent, and after 25 years have nothing.

Or you can spend a chunk every month on a mortgage, and after 25 years have a house. Then the overhead stops so you have more disposable income, and you have something to leave to the children.

So the final benefit goes to either (a) a landlord, or (b) you and your family. Take yer pick.

[Turbodiesel1690]

When you buy you are paying your own mortgage, when you rent you are paying someone else's mortgage, it aint rocket science

[Hackney]

When you rent you have much more flexibility.
We have the longest commutes in Europe in part due to our high levels of property ownership.

Don't get me wrong, I'm not dead against owning I just think we're obsessed with it to the exclusion of other factors. This, in turn, drives the high cost of renting which makes it less viable.

[Happy82]

Turbodiesel1690 said:

When you buy you are paying your own mortgage, when you rent you are paying someone else's mortgage, it aint rocket science

We're finding it cheaper to buy than to rent. Our monthly mortgage will be £700 a month, to rent an equal property in the area we'd be looking at £950 minimum. And again, at least it's money towards our future rather than paying for someone else.

With regards to Europe, my experience in France and Germany is that people start out renting as it's affordable (e.g I was able to rent at €200 / month in 2004 in a seaside French town with sea views) and gives them chance to save towards their own property in the future. The difference in the UK is that rental costs are so high that a lot of people want to try and find a way onto the property ladder ASAP as otherwise they'll struggle to save for a deposit and be trapped in rental.

That's from my experience anyway

[jdw1234]

Turbodiesel1690 said:

When you buy you are paying your own mortgage, when you rent you are paying someone else's mortgage, it aint rocket science

Subject to buying a "forever" home on day 1.

If you have bought a crappy 1 bed new build flat that has just shed 25% of its value with a 10% down, IO mortgage whilst your missus has just got up the duff then it is a slightly different situation.

If you have a big deposit and can afford a 4-5 bed house near decent schools on day 1 then buying is a no brainer.

[kingston12]

Simpo Two said:

Seems to me that you can spend a chunk every month on rent, and after 25 years have nothing.

Or you can spend a chunk every month on a mortgage, and after 25 years have a house. Then the overhead stops so you have more disposable income, and you have something to leave to the children.

So the final benefit goes to either (a) a landlord, or (b) you and your family. Take yer pick.

That depends on interest rates remaining low enough for buying to be cheaper than renting.

If I want a £300k house, I could rent it for £1,200 per month or buy it with a 3% mortgage which would cost me £750 per month in interest.The other £450 could go towards paying off the mortgage itself. As you say, buying is definitely the better option in this case

However, if interest rate increases mean that the best mortgage rate that I could get is 6%, my monthly interest payments would be £1,500 - more than the rent and I'd still not own the house at the end of the mortgage term.

[Mark Benson]

Simpo Two said:

Seems to me that you can spend a chunk every month on rent, and after 25 years have nothing.

Or you can spend a chunk every month on a mortgage, and after 25 years have a house. Then the overhead stops so you have more disposable income, and you have something to leave to the children.

So the final benefit goes to either (a) a landlord, or (b) you and your family. Take yer pick.

In the UK, this seems to be the majority view. However we currently have a situation where it's favourable to buy due to low interest rates and a view of renting as a short-term situation. It's by no means the only option, given a less property-as-investment driven market.

In countries where renting is more the norm, tenants usually have longer assured rental periods (10 years is not uncommon), guaranteed rates of rental at much lower rates than the equivalent mortgage over 25 years and more professional landlords who aren't just chancers looking to make a quick buck alongside their day job.

As for the question "what about retirement?", the lower rental costs usually mean renters put aside more towards their old age and either buy somewhere with cash upon retirement (the property markets not being so volatile as there is not the view of property as investment) or an annuity sufficient to pay their rent.

I sold my house in 2007 and we moved back up north. In order to see if my wife could stand living close to the inlaws we chose to rent and put aside the equity. I made more interest on the money (index linked savings certs. and a few investments) than if we'd have bought a place and I didn't do anything clever with it, but I was able to have flexibility.

We would have rented for longer, but when we approached our landlord, he wouldn't sign a long lease with a guaranteed (already generous for the area) rental amount so we eventually found a place to buy. We liked the idea of a 5 or 10 year guaranteed tenancy as it allowed us to put down roots, but the landlord didn't want guaranteed tenants and a guaranteed rent, preferring the option to be able to sell if the 'market went up significantly'. Since we left, he's had 3 months with the place empty, then found some tenants who have since left after the 6 month assured period was up then another 2 months empty. Local property prices are (still) static....

[Hugo a Gogo]

Matt.. said:

Are there many other countries in the world where once you finish education, there is a big rush for buying a house, and if you don't buy one, you feel left out? Are we the only country with this obsession for ownership over renting?

It all seems a little crazy really. No wonder half the country is miserable, as they're all stuck somewhere they don't want to live, and either saving like mad, or paying for a house they can't afford Maybe we should promote renting more!

here in Germany only around 40% of people own their own home

people tend to only buy once too, and only usually those with families (or planning them) buy at all

most people rent, and in cities mostly they rent flats/appartments

as a rough plucked-out-of-my-arse guess I'd say only 10% or less of homes in Düsseldorf are 'houses'