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Maths of buying vs renting, which is cheaper?


AlfredTheLittle

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33 minutes ago, jm51 said:

As a kid in the pre internet days, once my location changed, that was the last I saw of any friends I had made.

Yes internet ruins everything!

I just dont have FB or any social media accounts so no one can contact me ... people i used to be in touch with dont use email, theyd call and i've a new number since lockdown!

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AlfredTheLittle
6 hours ago, Hancock said:

Were you the one who went all in with 200k in BP/Shell shares?

Half tempted to do something similar, if they go down to 250/1100.

Not me, that's pretty much where I am now but I think the original all in poster (can't remember who it was) had a fair bit more than me 

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12 hours ago, Frank Hovis said:

The biggest advantage of renting is of course your abilaity to give notice and leave.

I picked up this sad end to Sparks' drummer this morning.

pany. When the police and local housing association did not take action against the neighbour despite numerous complaints, Diamond got drunk and hanged himself from the loft ceiling in his home on 10 September 2004, though news of his death was only made widely known five months later when the verdict of suicide was confirmed at inquest.

https://en.wikipedia.org/wiki/Norman_"Dinky"_Diamond

 

He was an alcoholic and I doubt it was his neighbour drove him to drink.

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goldbug9999
On 26/07/2021 at 09:01, Frank Hovis said:

The biggest advantage of renting is of course your abilaity to give notice and leave.

I picked up this sad end to Sparks' drummer this morning.

220px-Norman_Dinky_Diamond_1974.jpg

When The Four Squares failed Diamond gradually drifted out of music[5] and after a series of jobs, in 1998 he and his partner of 21 years Jane Gant moved into a small terraced house in Sandhurst in Berkshire where he was troubled by a noisy neighbour and her partner for five years who slept all day and played loud music all night and who argued loudly in the street. At the same time Diamond had recently left a job he enjoyed and taken one which he hated, working for an internet gardening company. When the police and local housing association did not take action against the neighbour despite numerous complaints, Diamond got drunk and hanged himself from the loft ceiling in his home on 10 September 2004, though news of his death was only made widely known five months later when the verdict of suicide was confirmed at inquest.

https://en.wikipedia.org/wiki/Norman_"Dinky"_Diamond

 

This is why a detached house is priceless for me, nothing on this earth is worse than hearing some other cunt talking / playing music / watching tv / farting / whatever when you want piece and quiet.

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haroldshand
On 24/07/2021 at 19:44, AlfredTheLittle said:

I'm in my mid 40s, I have some money saved which I've been intending to use to buy a house, but circumstances have changed and it looks like I'll be renting instead. 

By my fairly simplistic maths, I would calculate that I could be better off renting than buying in any case, based on the following:

Money available: £200,000

Remaining life: 40 years

1. Cost of buying a house:

£200,000

2. Cost of renting:

£1,000 per month x 40 years = £480,000

Less dividends received from £200k invested (assuming 3% pa for 40 years) -240,000

Total cost of renting: £240,000

Using 3% return on £200k invested, buying wins, but not by much. If 4% return is assumed, renting would cost £160,000, so would win by £40k

The problem with this calculation is that rent won't still be £1,000 pm in 40 years' time. If both the rent and the dividends are compounded at 3% per year buying ends up loads cheaper, because the rent figure being compounded is higher than the dividend figure being compounded.

I think the takeaway is that renting would probably be cheaper than buying if you've got investments generating returns which equal the rent, particularly at the moment when surely there must be a big risk of a housing market crash. Also, you want to compound your dividends rather than use them to pay the rent, so renting wouldn't necessarily be a good retirement strategy.

Anyone got any views?

 

A few things..

I have had a handful of properties in my life and always sold at a good profit, though I was never looking for financial gains. I am renting now and have a great deal in a Village where I would struggle to buy now, but the worst house in the Village I live now is a great life.

My thoughts, I priced up a job in Cambridge recently that was ex council and looked a bit of a dump, the owner told me it was valued at £500,000, my jaw hit the floor. Even if I have the money I am not wasting it on shit like that and would sooner head for Portugal.

And should I ever be in a position in 10 years time and before retirement and still renting I will swap from being 100% self sufficient and never on welfare to becoming close to 100% a burden on society and getting my rent paid with my wealth "spread" shall we say.

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On 26/07/2021 at 16:37, Hancock said:

Best well out of it, and sailing your own ship once you reach a certain age.

aye I'm counting down the months till the mothership comes along.....:)

 

E7O1bawXoAAmGrs.jpeg

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2 minutes ago, nirvana said:

aye I'm counting down the months till the mothership comes along.....:)

 

E7O1bawXoAAmGrs.jpeg

You definitely out of here in the coming months?

 

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6 minutes ago, Hancock said:

You definitely out of here in the coming months?

 

I'd like to be, I think lol but I've still got loads to do and tbh I'm in quite a 'happy place' at the mo :)

so it's not an absolute essential but yeah I think it could be interesting BUT I want to drive and that's v.tricky lol

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9 hours ago, goldbug9999 said:

This is why a detached house is priceless for me, nothing on this earth is worse than hearing some other cunt talking / playing music / watching tv / farting / whatever when you want piece and quiet.

This is what I have to remind myself when I get too wound up about the financial hit of HPI - that I've enjoyed 10 years in an apartment with no noise whatsoever from either neighbour. It's as private if not more so than a detached house. I have been lucky in that regard - it has been a great quality of life with privacy and a short walk to everything that I need.

My brother got onto the housing ladder by the skin of his teeth and the semi that's joined to him is rented to a couple with a noisy yappy fucker dog who play really loud music over the weekend and most recently have a fucking inflatable hot tub set up in the back garden that they screech at the tops of their voices over when it's on. Fucking nightmare. He now goes back to my parents over the weekend.

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Living in a quiet rural area would drive me bonkers. I'm living in an inner city area and enjoy hearing the noises of other people living their life without me being part of their lives. During the early lockdowns, I missed the sounds of excited children playing outside. That has returned thankfully.

Good thick walls here. Did a noise test with the neighbour above me and we can both turn the music up to 11 without disturbing the other.

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Maybe worth looking into if the price is right -

@DurhamBorn whats this part of town like 

View this email in your browser
ae80994a-d98a-4208-af70-05520133155f.png

Trinity Mews
on sale now

feeb3dd9-31b3-4e6b-b14a-1461580cae15.jpg

 

Now is the time to design and create a bespoke new home at Trinity Mews, Durham, DH1

 
We’ve brought you Durham’s first custom build development - in partnership with Durham County Council - so you can create a home exactly as you want it. Commuting to Durham City Centre, Sunderland, Newcastle, and Darlington is simple with easily accessible routes by road and rail.
 
Trinity Mews offers a collection of nine serviced plots to create new 3 to 5-bedroom detached homes with garages, so you to achieve flexible living spaces designed specifically for you. You’ll be able to personalise your exterior design, internal rooms layout and kitchens, bathrooms, bedrooms and much more.

 

Creating your bespoke home at Trinity Mews


Our team can help you create your home with confidence from choosing your plot, designing your home and financing your build. Speak to us today to find out more about our expert design and planning package and clinch a new home you want to live in every day.
 
adc9af3e-9a6a-9494-9937-e823c447df53.jpg

Viewing Days


When
Friday, 6 August 2021, 2pm to 4pm
Saturday, 7 August 2021, 9am to 11am


Where
Trinity Mews, Trouts Lane, Durham, County Durham, DH1 5RQ

How
Book your appointment on 0345 223 4452 or [email protected]
 
Alternatively, you can book your appointment online.
Book viewing day
 

Reserving your plot


From Monday, 2 August 2021 you can reserve your serviced plot. Register your interest today. Don’t compromise – choose to design and create a home that meets your needs now and in the future.
Register my inter
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Wight Flight
5 hours ago, Hancock said:

Maybe worth looking into if the price is right -

@DurhamBorn whats this part of town like 

View this email in your browser
ae80994a-d98a-4208-af70-05520133155f.png

Trinity Mews
on sale now

feeb3dd9-31b3-4e6b-b14a-1461580cae15.jpg

 

Now is the time to design and create a bespoke new home at Trinity Mews, Durham, DH1

 
We’ve brought you Durham’s first custom build development - in partnership with Durham County Council - so you can create a home exactly as you want it. Commuting to Durham City Centre, Sunderland, Newcastle, and Darlington is simple with easily accessible routes by road and rail.
 
Trinity Mews offers a collection of nine serviced plots to create new 3 to 5-bedroom detached homes with garages, so you to achieve flexible living spaces designed specifically for you. You’ll be able to personalise your exterior design, internal rooms layout and kitchens, bathrooms, bedrooms and much more.

 

Creating your bespoke home at Trinity Mews


Our team can help you create your home with confidence from choosing your plot, designing your home and financing your build. Speak to us today to find out more about our expert design and planning package and clinch a new home you want to live in every day.
 
adc9af3e-9a6a-9494-9937-e823c447df53.jpg

Viewing Days


When
Friday, 6 August 2021, 2pm to 4pm
Saturday, 7 August 2021, 9am to 11am


Where
Trinity Mews, Trouts Lane, Durham, County Durham, DH1 5RQ

How
Book your appointment on 0345 223 4452 or [email protected]
 
Alternatively, you can book your appointment online.
Book viewing day
 

Reserving your plot


From Monday, 2 August 2021 you can reserve your serviced plot. Register your interest today. Don’t compromise – choose to design and create a home that meets your needs now and in the future.
Register my inter

If I have read that correctly - you can view on Aug 6th, but reserve a plot from Aug 2nd.

No point viewing. They will all be sold sight unseen by then.

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3 minutes ago, Wight Flight said:

If I have read that correctly - you can view on Aug 6th, but reserve a plot from Aug 2nd.

No point viewing. They will all be sold sight unseen by then.

Its not the same as down south, and they may well be flogging them at rip off prices, where you could buy a house for the same price.

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Wight Flight
3 minutes ago, Hancock said:

Its not the same as down south, and they may well be flogging them at rip off prices, where you could buy a house for the same price.

So why offer them for sale before you can view them?

I doubt our lettings agents have done a viewing in months. Just no need. 

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2 minutes ago, Wight Flight said:

So why offer them for sale before you can view them?

I doubt our lettings agents have done a viewing in months. Just no need. 

Isnt it the trend to launch things these days.

ive emailed to see if i can get a price, just out of curiosity. 

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1 hour ago, eek said:

Hard to tell as it's on the road to Lanchester surrounded by fields... 

OK ive got the prices, just in case there are any lottery winners looking to burn through their money .... this is just for the plot,

This is the email i got with a link to the prices -

The site is now live and offers can be submitted. Once an offer is accepted you will pay a £2000 reservation fee. At the exchange of contracts, you will then pay 5% of the final sale price minus the £2000 reservation fee already made. Finally, once you have planning approved the sale will complete.

There are two viewing days coming up on:

August 6th - 2pm-4pm

August 7th – 9am-11am

If you wish to attend, please confirm which day. We will have a brochure with all the information available by then.

If you're looking to finance your build through a mortgage then we can put you in touch with build store who offer on 80% of all self build mortgages across the UK.

Obviously, there are different options you can take regarding building your own custom home.

1.)           You can use your own architects, submit the planning application yourself, deal with planning regulations and arrange your own contractors.

2.)           You could use our design package which involves our own architects and designers, we would take the application through planning as well as dealing with building regulations. We could also arrange contractors to build your own home.

If you’re interested in our design package I can pass on some more information. It’s a much more cost effective way of building your home and it speed up the planning and construction process for you.

If you copy this web address it will show the different plots. If you click on the plot, it’ll give you a short description of size and cost.

Web address showing plot prices:

https://custombuildhomes.co.uk/plotstore/sites/trinity-mews/available-plots/

image.png.94a0f74000ea6f47f59a4961c40cd2e1.png

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With a crooked smile
On 25/07/2021 at 13:44, Don Coglione said:

The only way that society can balance this out, enabling the lower-paid to live in such an area, is for employers to provide accommodation

Which is exactly what happens in the Lake District. Looked at a large house this weekend owner had already been approached by someone who wanted it for staff accommodation. That's fairly common for 5 bed plus Victorian terraces here. 

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With a crooked smile

I guess one thing to factor in as well with renting is the cost of being forced to move periodically and the stress that goes with it. 

There's a lot to be said for being able to make changes or do repairs on a schedule that fits you rather than having to deal with a landlord. 

I currently rent but own an 11 bed guest house with my partner. We're turning the owners accommodation in the guesthouse into a self contained holiday let with the aim of buying shortly. I've just been given an agreement in principle for a residential mortgage. 

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With a crooked smile
On 29/07/2021 at 20:15, Wight Flight said:

doubt our lettings agents have done a viewing in months. Just no need

We rented our place on the strength of a whatapp video. But we have a cat and a dog and I think we just lucked in to a lovely rural area. 

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Frank Hovis
6 hours ago, With a crooked smile said:

Which is exactly what happens in the Lake District. Looked at a large house this weekend owner had already been approached by someone who wanted it for staff accommodation. That's fairly common for 5 bed plus Victorian terraces here. 

That used to be the way in Cornwall; big hotels would have staff annexes in order to attract and retain staff with the free tied accommodation.

Since the turn of the turn of the century they've been sold off for new developments and I can't now think of any bar on the Isles of Scilly where without staff accommodation they simply wouldn't have staff.

It would be pleasing to see that start to make a comeback.

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With a crooked smile
56 minutes ago, Frank Hovis said:

That used to be the way in Cornwall;

What we also see a bit of up here is smaller bnbs that aren't so nice might have a 3 rooms for tourists and another 2 long term let's for workers (often EE). 

I guess the long termers provide a steady albeit lower income. Also you find the older BnB owners are often winding down and want to take it a bit easier. 

 

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I stayed at Aussie run hostels when working in London. Almost every hostel had a manager or assistant manager who started as one of the backpacker guests then ran out of money. Do a bit of work to pay your rent why don'tya. One guy had been there almost 2 years and was seeing next to nothing of London.

 

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Don Coglione
16 hours ago, jm51 said:

I stayed at Aussie run hostels when working in London. Almost every hostel had a manager or assistant manager who started as one of the backpacker guests then ran out of money. Do a bit of work to pay your rent why don'tya. One guy had been there almost 2 years and was seeing next to nothing of London.

 

Great places to get laid though!

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On 24/07/2021 at 19:44, AlfredTheLittle said:

I'm in my mid 40s, I have some money saved which I've been intending to use to buy a house, but circumstances have changed and it looks like I'll be renting instead. 

By my fairly simplistic maths, I would calculate that I could be better off renting than buying in any case, based on the following:

Money available: £200,000

Remaining life: 40 years

1. Cost of buying a house:

£200,000

2. Cost of renting:

£1,000 per month x 40 years = £480,000

Less dividends received from £200k invested (assuming 3% pa for 40 years) -240,000

Total cost of renting: £240,000

Using 3% return on £200k invested, buying wins, but not by much. If 4% return is assumed, renting would cost £160,000, so would win by £40k

The problem with this calculation is that rent won't still be £1,000 pm in 40 years' time. If both the rent and the dividends are compounded at 3% per year buying ends up loads cheaper, because the rent figure being compounded is higher than the dividend figure being compounded.

I think the takeaway is that renting would probably be cheaper than buying if you've got investments generating returns which equal the rent, particularly at the moment when surely there must be a big risk of a housing market crash. Also, you want to compound your dividends rather than use them to pay the rent, so renting wouldn't necessarily be a good retirement strategy.

Anyone got any views?

 

Most houses bought use mortgages and one key driver is buying forces ‘saving’ by debt repayment.

A £250k for a house is a lot less ‘interest’ on a mortgage than the rent (where I live) and overall the total mortgage payment is broadly similar to the rent.

So regardless of house prices rising or falling the equation starts to focus more on debt repayment before retirement (and therefore no mortgage payments after say 65) 

Having said that home ownership may force saving but it might also encourage daft equity release etc so this isn’t a straight maths line….

Other factors 

1) Moving house (buying and selling) is expensive. So if someone moves every 2/3 years then renting might be better. 

2) Type of house is a factor. I have seen £750k flats let for £850 pcm because they are a bit shabby. Indeed a friend of mine has rented one for 5 years and has decorated the place… knowing he has an absent landlord (he is abroad) who just wants hassle free reliable rent.
However it is possible to get a blinged house or flat for £1000 pcm but it could have been bought and decorated for maybe £200k.

If it’s a pure maths question with rates so low then borrowing £200k at 1.5% only costs £3k a year so even factoring in insurance, boilers, maintenance etc… if it’s buying with OPM (other people’s money) then buying tends to win. Plus the control it gives you and the promise of a rent free retirement. 

If it’s a ‘use of capital’ maths question then overall it’s an investment choice and I wish I bought Apple shares in 1985.😉

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