rent or buy, rent or buy, rent or buy hm......

[prand]

So I understand current wisdom of selling a house and sitting on the equity until something suitable comes along, once can see that prices will drop no further. But is it worth doing this permanently?

Upsides:
- Rent the place you need/want now, and change or upgrade when you want/can afford it (we are two now, expect family in coming years), or when your lifestyle dictates
- Rent in the area you want to live, as there are currently more affordable and more choice of rental properties
- Currently higher chance of negotiable rents
- Possible first dibs on house if landlord wants to sell and you fancy staying put
- No costs on home improvements, or repairs that could cost thousands
- No stamp duty, estate agent (ok yes, but not huge), or solicitors fees when moving, so moving is cheaper and easier
- Big deposit can be spent on spanking new GT3 (ha ha) - actually I mean you have control over your investments and not have them locked into your property
- Lesser concerns and exposure to increasing interest rates
- Interest paid on mortgages of a few hundred £K over 20 years is a lot!

Downsides
- Paying a landlord four figures a month and never seeing a return on it
- Getting to 65 and not having a house as a pension
- Not having "your own home" to do what you want with it, decorate or making it how you want and your family home
- Loss of earnings by redundancy if already spent on GT3s and holidays etc means no financial backup if al goes t*ts up
- missing out on the "property elevator" if prices go up
- hassle of managing an investment portfolio and getting bad advice
- being forced to move if Landlord sells
- restrictions on lease - no pets, hanging paintings, noisy cars etc
- Landlord will, upgrades to kitchen, bathrooms, double glazing etc, so you might have to move to get a better kitchen etc
- overall cost of renting will always remain the same in real terms (£1500 a month currently x 12 months x 20 years= £360 000, then add rent increases to that, will be a big figure!), whereas repaying a mortgage should get relatively cheaper over the years

The way things are going, I am coming round to the idea that with some sensible investment, I can live in an affordable house I like in an area I like, and also have something significant to retire with.

Has anyone on here lived in rented accommodation over a long period of time and is it the better option for the long run?

Edited by prand on Wednesday 27th May 17:21

[prand]

Hmmm. good point about paying rent when retired. If I was retiring, I would like to be paying as little as possible on housing to offset a reduced income. Or at least have enough put aside to do so.

However, I am in a position now when I want to upsize with impending family growth, and like the last poster, my mortgage for the forseeable future would be significantly more than renting an equivalent 3/4 bedroom houses in the area I am looking.

If I, or a canny financial advisor put together a 25 year saving and investment model for me and my wife, I'm sure it could be done.

However, speaking to Mrs P last night, I think she would rather live in somewhere she owns, due to the emotional attachment and ability to change the curtains, bathroom etc when she feels like it. Promising to rent temporarily (maybe for a max of 1 year) might be the best way to work her around.

[prand]

Dave_ST220 said:

Like i said-it really depends on what the market is doing when you buy & sell, we purchased way before the peak (but could have saved more if i had purchased property rather than bloody cars!), and have sold at not the best time but certainly could have been worse, the falling market played into our hands in buying the new property-25% off what they sold for last August. Re:the house to buy would cost more-that was my point regarding buying what you can afford or renting what you couldn't afford to buy. I can't get out of my head that after 15 years i'll own something that will be worth more than i paid(dispite what some think) while the people who rented may have £50k in the bank but still need to pay out for somewhere to live. Maintenance costs on properties i have owned have been bugger all tbh.

Dave - don't forget after selling my current house I will have the equity, and other savings (a lot of which would have been spent on stamp duty and fees when buying a new house), so if I move into renting I will be sitting on a potentially large investment that theoretically could match the return on property for a long while yet if I am clever and get some good advice. I could always invest in property (commercial or B2L) if I wanted to get on the ladder too.

[prand]

Welshbeef said:

Another thing as time goes by assuming zero overpayment the % of the monthly payment increases on the capital side whereas if renting the rent will have increased in that time not decreased so your alternative investments would have to work even harder to counter this aspect of the repayment mortgage.

That seems like a very good point. House owning as forced, but tax free savings.