Comments on: Warning: buying a flat in West London will cost you thousands a year more than renting http://monevator.com/how-buying-in-west-london-will-cost-you-thousands-a-year-more-than-renting/ Make more money, invest profitably, retire early Tue, 22 May 2012 14:20:12 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: The Investor http://monevator.com/how-buying-in-west-london-will-cost-you-thousands-a-year-more-than-renting/comment-page-1/#comment-29715 The Investor Tue, 23 Mar 2010 23:59:40 +0000 http://monevator.com/2007/09/09/how-buying-in-west-london-will-cost-you-thousands-a-year-more-than-renting/#comment-29715 @John - Interesting anecdote, thanks. I strongly believe in buying property is a wise move for most people, for the reasons you cite (although there are alternatives, such as saving the difference when renting is cheaper and investing it). The question periodically is timing - the housing market has seemed by most conventional measures seriously over-valued for 4-5 years, in a way that as far as I'm aware it didn't in the 1970s though it probably did in the late 1980s. When the correction began, it was so threatening to the economy that policy began to move in a way to stave off or reverse property price declines, especially given what they'd already done at the margins in the US. That may be another reason to always buy, as you suggest - in a society of homeowners, side with the majority! But anyway, my understanding is that renting has usually been *more* expensive than buying, due to the fact a landlord typically makes a profit. This article is really about how that's not currently (or in 2007, when it was written) the case. Perhaps that's permanently changed due to expectations among landlords of capital gains to make up for subsidizing renters, but 'permanently changed' has a bad track record in the markets! ;) Thanks for your comments, a good warning on the danger of being left behind. @John – Interesting anecdote, thanks. I strongly believe in buying property is a wise move for most people, for the reasons you cite (although there are alternatives, such as saving the difference when renting is cheaper and investing it). The question periodically is timing – the housing market has seemed by most conventional measures seriously over-valued for 4-5 years, in a way that as far as I’m aware it didn’t in the 1970s though it probably did in the late 1980s. When the correction began, it was so threatening to the economy that policy began to move in a way to stave off or reverse property price declines, especially given what they’d already done at the margins in the US.

That may be another reason to always buy, as you suggest – in a society of homeowners, side with the majority!

But anyway, my understanding is that renting has usually been *more* expensive than buying, due to the fact a landlord typically makes a profit. This article is really about how that’s not currently (or in 2007, when it was written) the case. Perhaps that’s permanently changed due to expectations among landlords of capital gains to make up for subsidizing renters, but ‘permanently changed’ has a bad track record in the markets! ;)

Thanks for your comments, a good warning on the danger of being left behind.

]]> By: John Metcalfe http://monevator.com/how-buying-in-west-london-will-cost-you-thousands-a-year-more-than-renting/comment-page-1/#comment-29698 John Metcalfe Tue, 23 Mar 2010 18:25:12 +0000 http://monevator.com/2007/09/09/how-buying-in-west-london-will-cost-you-thousands-a-year-more-than-renting/#comment-29698 I disagree. My neighbour, aged 65, has lived in her flat for 40 years; she was given the opportunity to buy it for £7k in 1970 but declined, signing a long-term rental agreement instead. In the meantime, the rent has increased from £20 to £600/month, which she will continue paying until she dies, let's say another 25 years. So, she regrets not having purchased the flat for £7k in 1970 using an interest-only mortgage. True, it would have been painful initially. But today, the interest on £7k is very little and maybe she could pay it off completely without too much trouble. She would then own a property worth £350k and could investigate an annuity which would give her an income until she dies. But no, she originally choose to rent and is currently dealing with the fair-rent people as the landlord wants to increase her rent to £700/month, ouch! I disagree.

My neighbour, aged 65, has lived in her flat for 40 years; she was given the opportunity to buy it for £7k in 1970 but declined, signing a long-term rental agreement instead.

In the meantime, the rent has increased from £20 to £600/month, which she will continue paying until she dies, let’s say another 25 years.

So, she regrets not having purchased the flat for £7k in 1970 using an interest-only mortgage.

True, it would have been painful initially. But today, the interest on £7k is very little and maybe she could pay it off completely without too much trouble.

She would then own a property worth £350k and could investigate an annuity which would give her an income until she dies.

But no, she originally choose to rent and is currently dealing with the fair-rent people as the landlord wants to increase her rent to £700/month, ouch!

]]> By: EuGin Song http://monevator.com/how-buying-in-west-london-will-cost-you-thousands-a-year-more-than-renting/comment-page-1/#comment-44 EuGin Song Thu, 21 Feb 2008 22:50:52 +0000 http://monevator.com/2007/09/09/how-buying-in-west-london-will-cost-you-thousands-a-year-more-than-renting/#comment-44 No surprises here about W.London. It's the most expensive region in the UK and the most popular to live in. I have owned and rented a flat in Hammersmtih for about 10 yrs. The rise in price has outstripped the rise in rent by a long long way. So it's no surprise that the cost of owning far outweighs the cost of renting. We run a FREE property lettings website covering W.London and have over a 1000 users a week looking for rental accomodation in the area and it's growing all the time. More and more people are renting rather buying. It may not be out of choice and is an issue of affordability. But the fact is, more and more people are renting whatever the reason. www.heathrowlettings.com No surprises here about W.London. It’s the most expensive region in the UK and the most popular to live in. I have owned and rented a flat in Hammersmtih for about 10 yrs. The rise in price has outstripped the rise in rent by a long long way. So it’s no surprise that the cost of owning far outweighs the cost of renting. We run a FREE property lettings website covering W.London and have over a 1000 users a week looking for rental accomodation in the area and it’s growing all the time. More and more people are renting rather buying. It may not be out of choice and is an issue of affordability. But the fact is, more and more people are renting whatever the reason.

http://www.heathrowlettings.com

]]> By: Housing Rubble : Is Renting a Waste of Money? http://monevator.com/how-buying-in-west-london-will-cost-you-thousands-a-year-more-than-renting/comment-page-1/#comment-7 Housing Rubble : Is Renting a Waste of Money? Fri, 23 Nov 2007 14:39:23 +0000 http://monevator.com/2007/09/09/how-buying-in-west-london-will-cost-you-thousands-a-year-more-than-renting/#comment-7 [...] past. In fact, compared to renting, buying is now at its most expensive for many many years. See this Monevator article for a real-life comparison based on the case of a west London [...] [...] past. In fact, compared to renting, buying is now at its most expensive for many many years. See this Monevator article for a real-life comparison based on the case of a west London [...]

]]>