Renting is dead money

everdead.ie

homerjay2005 wrote: »

this is pretty much it, its all about value. the house i am currently in would cost about 2 times as much for us to buy it in terms of monthly rent v mortgage and we are not responsible for interest payment, rates, property tax, unkeep, insurance etc etc so right now im saving about €10k a year compared to my neighbours paying a mortgage...we are lucky though, the rent is exceptionally low for our area.

and the biggest advantage for me is that when you buy a house, your stuck to that area for many years (unless you want to play the negative equity violin) whereas renting you can be flexible.

im from the country but live in Dublin and the house is valued at about €425k. a similar house in the country is probably worth about €125k maximum. id rather save as much money as possible every year, keep it tickin over and then have enough money saved in 20/30 years to buy a house to retire in.

Serious issues in Dublin with the terribly small houses for outrageous prices. Massive need for quality 3 and four bed homes in Dublin.

homerjay2005

homerjay2005 wrote: »

this is pretty much it, its all about value. the house i am currently in would cost about 2 times as much for us to buy it in terms of monthly rent v mortgage and we are not responsible for interest payment, rates, property tax, unkeep, insurance etc etc so right now im saving about €10k a year compared to my neighbours paying a mortgage...we are lucky though, the rent is exceptionally low for our area.

Why isn't your landlord upping the rent? He is obviously a bit asleep.

homerjay2005 wrote: »

and the biggest advantage for me is that when you buy a house, your stuck to that area for many years (unless you want to play the negative equity violin) whereas renting you can be flexible.

If you were to buy now when prices are low then you aren't really risking ending up in negative equity, you can also rent out rather than sell if you want to keep the property as an investment.

homerjay2005 wrote: »

id rather save as much money as possible every year, keep it tickin over and then have enough money saved in 20/30 years to buy a house to retire in.

This outlook I don't get. I'd like to have the nice house that I own to enjoy while I'm young rather than just keep "tickin" over. Also the house will be paid off by the time you get to retirement age if you buy when you are fairly young.

theenergy

scrubber72 wrote: »

We (my wife and I) are renting for the last 7 years. When we decided to get engaged we also applied for a mortgage of 240k. We were approved but couldnt find a house worth that value wise. Lots of crap out there.
Forward two years and wife loses job. No pay off just bye bye see ye later. Find plenty of ok houses that fit our criteria but not the one.
Forward another year wife starts working again and we talk to bank about our options. They say she has to be in full time employment for 18 months, we wait until then and are told that we can get 100k. Found it very difficult to get a place for that money.
Then 2 years ago she is made unemployed again so we are completely back to square one.
We called around to the banks and we are either told that they wont give us anything or in the case of one bank they offered us 20k. I told them i was looking for mortgage not a car loan.
I am on 42k per annum and we have roughly 40k in savings.
Its all down to our NDI which I believe are completely untrue figures that the banks use.
We pay 700 euro on rent, have no debts or loans and now a daughter.
For years we tried to find a home but its not for us as the banks say.
All my friends had said get on the ladder quick but now more and more of them say we are better off in the situation we are in now, with our savings that they don`t have.
Maybe some day we may get somewhere but until then we have to rent so to me "no its not dead money".

mate get in touch with the councils and their affordable housing schemes.... they are in my opinion great.

Dravokivich

I'd love to buy a house, but have to rent because I can't afford to get one somewhere that's easy for me to commute to work.

El Horseboxo

Everyone has extreme examples of one side or the other that will scare or put them off renting or buying.

People's circumstances change along with opinions. Mostly with age. So you got to do what suits you more. But you'll probably find what suits more comes down to economics rather than preference in a lot of cases.

I was fortunate enough to inherit 2 houses from a young age. Sold one at the peak of the boom and rented out the other while I moved back to the US and rented there. I recently bought a house though. Outright so no mortgage.

But I have to admit if I had of been looking for a mortgage I think I might have been sacred a bit. Before Christmas I checked a mortgage calculator at my local bank. For a 480,000 dollar mortgage I'd have paid 415,000 interest if I remember correctly. Now if rent is dead money I don't know that is. I could have afforded it on salary alone but I would not have felt right paying all that extra money for the privilege of a loan to buy a house.

However I also had a fear with renting based on 2 experiences from people I work with. Both were renting long term, well settled in the houses and had kids in the local school where they had friends. Also had friends in the neighborhood. Both were issued notices with intent to not renew their rental. Both got the required notice but still had to uproot and move. Meant changing schools due to district zoning. I don't have kids yet but I'd hate for that to happen.

Chazz Michael Michaels

El Horseboxo wrote: »

Everyone has extreme examples of one side or the other that will scare or put them off renting or buying.

People's circumstances change along with opinions. Mostly with age. So you got to do what suits you more. But you'll probably find what suits more comes down to economics rather than preference in a lot of cases.

I was fortunate enough to inherit 2 houses from a young age. Sold one at the peak of the boom and rented out the other while I moved back to the US and rented there. I recently bought a house though. Outright so no mortgage.

But I have to admit if I had of been looking for a mortgage I think I might have been sacred a bit. Before Christmas I checked a mortgage calculator at my local bank. For a 480,000 dollar mortgage I'd have paid 415,000 interest if I remember correctly. Now if rent is dead money I don't know that is. I could have afforded it on salary alone but I would not have felt right paying all that extra money for the privilege of a loan to buy a house.

However I also had a fear with renting based on 2 experiences from people I work with. Both were renting long term, well settled in the houses and had kids in the local school where they had friends. Also had friends in the neighborhood. Both were issued notices with intent to not renew their rental. Both got the required notice but still had to uproot and move. Meant changing schools due to district zoning. I don't have kids yet but I'd hate for that to happen.

I guess this comes back to my original post. Strong legislation to protect long term leases is necessary to break the Irish peoples obsession with owning a house.

Chazz Michael Michaels

Chazz Michael Michaels wrote: »

I guess this comes back to my original post. Strong legislation to protect long term leases is necessary to break the Irish peoples obsession with owning a house.

I don't see why we should encourage long term leasing over buying. Long term leasing really is a waste of money.

The only real advantage of renting is you can move fairly easily if you don't see yourself in an area long term. If you are taking out a long term lease you are planning on staying in a place long term and why on earth would you want to rent in this situation rather than buy?

Dravokivich

Dash Repulsive Cornet wrote: »

I don't see why we should encourage long term leasing over buying. Long term leasing really is a waste of money.

The only real advantage of renting is you can move fairly easily if you don't see yourself in an area long term. If you are taking out a long term lease you are planning on staying in a place long term and why on earth would you want to rent in this situation rather than buy?

Not everyone can afford to buy. It's a pain hoping for another place nearby is also up for rent around the time you need to move on.

Dravokivich

Dravokivich wrote: »

Not everyone can afford to buy. It's a pain hoping for another place nearby is also up for rent around the time you need to move on.

I understand that side of things. However the impression I get from the poster I quoted is that he thinks people who can afford to buy should instead be looking to long term lease which in my mind is stupid.

FollatonWood

I've honestly never felt the need to buy a house. I'm not saying people shouldn't do it, but for me I see little difference when with a mortgage your house still belongs to the bank anyway. I get that you'll own it eventually, but I don't think I'll care when I'm 60 odd whether my mortgage has been paid off and I don't fancy it hanging over me til then. I like the flexibility renting has and I can't see that changing.

nc19

Saggyjocks wrote: »

That old chestnut used to be my favourite

So here I am years later in a house that I 'own' with an unsustainable mortgage that I 'own'

If such long term lease agreements had existed then I would feel more secure and at the very least would have known when the lease would end whereas every year in my home now feels like borrowed time

Did you report that chap to the police? The fella with the gun ro your head????

Chazz Michael Michaels

Dash Repulsive Cornet wrote: »

I understand that side of things. However the impression I get from the poster I quoted is that he thinks people who can afford to buy should instead be looking to long term lease which in my mind is stupid.

In my mind, your belief is stupid.

Great debate technique.

nc19

I was paying my mother 400pm for the pleasure of living at home between 2001 & 2003

I was paying about the same the first time i moved out and rented a room in a house 2003

I paid about the same on the first apt myself and the missus rented 2004 & 2005

And am now paying around the same for the mortgage

Renting is for young people and old fools imo

nc19

I was paying my mother 400pm for the pleasure of living at home between 2001 & 2003

I was paying about the same the first time i moved out and rented a room in a house 2003

I paid about the same on the first apt myself and the missus rented 2004 & 2005

And am now paying around the same for the mortgage

Renting is for young people and old fools imo

bogmanfan

The problem with renting is it never ends. You will be paying rent until the day you die. At least with a mortgage, after 25/30/35 years you will be rent and mortgage free, freeing up a huge chunk of you monthly income. Additionally your mortgage will stay relatively stable over the lifetime of the mortgage, while rent can fluctuate wildly (usually upwards due to inflation). So while €1000 a month might seem huge now, in 20 years it should be a smaller proportion of your income. I remember when my parents finished paying their mortgage 10 years ago, it was €80 a month! When they first took it out, 35 years ago, that was a big sum of money.

Jester252

Also buying is better if you don't overshoot the property value.

Chazz Michael Michaels

Chazz Michael Michaels wrote: »

In my mind, your belief is stupid.

Whats smart about renting a house for 25 years when you could have bought it and have it paid off in the same period of time? Also the way house prices are now in a lot of places you can own a house outright a lot sooner than you retire.

You then have a lot of extra money per month, or more importantly when you retire and have less of an income you have more money to spend on yourself. You also have something to leave to your children and make their lives a bit easier.

everdead.ie

Chazz Michael Michaels wrote: »

In my mind, your belief is stupid.

Great debate technique.

Can you at least see where the other side of the fence is coming from that after yo pay off your mortgage it frees up a chunk of your income.
While renting leaves you exposed until you die, Issues around this include possibly running out of money before you die.

Shenshen

Chazz Michael Michaels wrote: »

I guess this comes back to my original post. Strong legislation to protect long term leases is necessary to break the Irish peoples obsession with owning a house.

Couldn't agree more.

It was one of the first big shocks when I came over here, the amount people would charge you to rent a place and the practically non-existent tenant protection laws.
I would never have considered buying a house in Germany - it doesn't make sense there. You can rent a place with an interminate lease, you furnish and decorate it however you like it, and the rents are strictly regulated - your landlord is only allowed to increase it by a certain percentage (something like 8%, I think it was) every number of years.

But having lived here for a while I realised that the cards will be stacked against you until you give in to the pressure and actually buy a place.

ThirdMan

Yeah I remember that old saying alright. And you'd always hear it over a few pints, which would be puked up about 4 hours later. It always amazed me to hear people that literally pissed their wages away talking about wasting money. My rent used to cost less than their drinking. It still does.

Shenshen

everdead.ie wrote: »

Can you at least see where the other side of the fence is coming from that after yo pay off your mortgage it frees up a chunk of your income.
While renting leaves you exposed until you die, Issues around this include possibly running out of money before you die.

It only leaves you exposed because the legislation here strongly favours the landlord.

everdead.ie

Shenshen wrote: »

It only leaves you exposed because the legislation here strongly favours the landlord.

It doesn't actually, you are left exposed because after you retire you will still have to pay a monthly sum to stay somewhere.

Shenshen

Shenshen wrote: »

It only leaves you exposed because the legislation here strongly favours the landlord.

Legislation or no legislation long term leasing makes no sense. For a start why would you not want to own the place you live so that you can do whatever you want with it and you kids can really call home. You will after a certain number of years (and not that long with the low house prices) own the place thus freeing up a considerable amount of money every month to spend on other things and you will have an asset which you can pass on to the next generation.

Also when you retire your income will most likely drop a fair bit so paying rent is just not something you want to be doing.

Dravokivich

Shenshen wrote: »

It only leaves you exposed because the legislation here strongly favours the landlord.

Actually a few months ago, from what I've read up, it only favours tenants who don't sign leases.

Other than that, there is nothing favourable for tenants or landlords.

Dash Repulsive Cornet wrote: »

Legislation or no legislation long term leasing makes no sense. For a start why would you not want to own the place you live so that you can do whatever you want with it and you kids can really call home. You will after a certain number of years (and not that long with the low house prices) own the place thus freeing up a considerable amount of money every month to spend on other things and you will have an asset which you can pass on to the next generation.

House prices can be considered low now in relation to 7 years ago, but they are still not low by any real means. Seriously, what is the overall difference one pays in a life time of rent and up to 40 years on a mortgage?

Guy:Incognito

Shenshen wrote: »

It only leaves you exposed because the legislation here strongly favours the landlord.

I don't see why restrictions should be put on landlords beyond certain basics. If a person owns a house and wants to charge €10,000 a month to rent it, then that's their choice. If no one rents it, its the owners roblem Just like your local shop can charge €50 for a Mars bar if they want.

Boulevardier

"For a start why would you not want to own the place you live so that you can do whatever you want with it and you kids can really call home."

On the continent, nobody thinks this. What is so special about us (and our former masters the Brits) that we feel we have to?

Does anyone remember the "3 F's" from their history lessons? These were: Fair rent, free sale and fixity of tenure. They never became part of Irish law, and indeed our tory supreme court would probably consider them unconstitutional! A pity, because with those measures in place, a tenancy would be something secure and dependable, and we would have avoided much of our property madness.

Shenshen

everdead.ie wrote: »

It doesn't actually, you are left exposed because after you retire you will still have to pay a monthly sum to stay somewhere.

Leaving you to choose where that may be and not having to worry about not being able to sell the 2-storey house you own because you can't get up the stairs that easily any more...

My grandparents recently moved from the house they had lived in for the last 50 years to a smaller, more convenient place.

No hassle with estate agents, banks, endless waiting to find a buyer, redecorating in the hope of attracting one, etc., they simply handed in the legal 3 month notice on their lease and moved.

The (legally controlled) rent they paid was ridiculously small compared to here, something around €400 for a 4 bedroom house in a suburb. They're paying a little less now and live more central, allowing them to give up driving.

Guy:Incognito

Dravokivich wrote: »

Seriously, what is the overall difference one pays in a life time of rent and up to 40 years on a mortgage?

Even if it worked out the same price over the 40 years, at least after the 40 years you own the house. You actually have an asset. If you started at 30, your now in a situation at 70 of owning a house or paying rent for another 20-30 years. I know I'd rather own it.

Chazz Michael Michaels

everdead.ie wrote: »

Can you at least see where the other side of the fence is coming from that after yo pay off your mortgage it frees up a chunk of your income.
While renting leaves you exposed until you die, Issues around this include possibly running out of money before you die.

In this country, that makes sense. In other, more advanced civilisations, it doesn't.

Guy:Incognito

Shenshen wrote: »

The (legally controlled) rent they paid was ridiculously small compared to here, something around €400 for a 4 bedroom house in a suburb. They're paying a little less now and live more central, allowing them to give up driving.

Buying the house has to have been cheaper than the rent, otherwise why would the landlord have it?

Shenshen

Dash Repulsive Cornet wrote: »

Legislation or no legislation long term leasing makes no sense. For a start why would you not want to own the place you live so that you can do whatever you want with it and you kids can really call home. You will after a certain number of years (and not that long with the low house prices) own the place thus freeing up a considerable amount of money every month to spend on other things and you will have an asset which you can pass on to the next generation.

Also when you retire your income will most likely drop a fair bit so paying rent is just not something you want to be doing.

Why would you not be able to do that with a rented place, the way people across Europe do?
Once you have a long-term lease on the place, you can do whatever you want with it, short of burning it to the ground of course. Why would your kids not call it home? I always did?

And yes, I can really see your children being happy inheriting a worn-down place in the arse end of nowhere which they will have to pay tax for and haven't a hope in Hades selling....
A friend of mine inherited her parent's house and she's seriously cursing them for the burden they left her with.

Dravokivich

Guy:Incognito wrote: »

Even if it worked out the same price over the 40 years, at least after the 40 years you own the house. You actually have an asset. If you started at 30, your now in a situation at 70 of owning a house or paying rent for another 20-30 years. I know I'd rather own it.

I'm not questioning house owning, I just don't see why people are putting up what looks to me is a weak argument questioning renting, flat out.

Shenshen

Guy:Incognito wrote: »

Buying the house has to have been cheaper than the rent, otherwise why would the landlord have it?

It's a corporation that owns it, I wouldn't know how much it would have cost to build some 100 years ago.

Guy:Incognito

Shenshen wrote: »

And yes, I can really see your children being happy inheriting a worn-down place in the arse end of nowhere which they will have to pay tax for and haven't a hope in Hades selling....
A friend of mine inherited her parent's house and she's seriously cursing them for the burden they left her with.

Why doesn't she sell it for €20,000 then? You'll always sell something at the right price.

anncoates

bogmanfan wrote: »

Additionally your mortgage will stay relatively stable over the lifetime of the mortgage, while rent can fluctuate wildly (usually upwards due to inflation).

Your mortgage payments can fluctuate wildly if interest rates change? Interest rates are very low at the moment. Might not be the case, 10, 20 or 30 years down the line.

Again, it really is down to the individual about what is best. With a mortgage, you're actually paying up to twice the mortgage amount over the lifetime of the mortgage but then again for renting to as effective an investment, you need to be saving a good whack on top of paying your rent so you're still forking out.

While I can see the attraction of flexibility re: renting, it's not as if you don't pay rent wherever you go and as for the idea of something "hanging over your head", just try not paying your rent every month and see what happens.

Guy:Incognito

Shenshen wrote: »

It's a corporation that owns it, I wouldn't know how much it would have cost to build some 100 years ago.

That's not the same thing that's being discussed, The thread is not about the merits of buying a house vs being in a council house.

I cant imagine the corpo are going to start building leafy estates with 4 and 5 bed houses to rent to professional couples cheaply any time soon.

Any private company is doing it to make money, much like a casino isn't there to send you home with full pockets.

everdead.ie

Shenshen wrote: »

Leaving you to choose where that may be and not having to worry about not being able to sell the 2-storey house you own because you can't get up the stairs that easily any more...

My grandparents recently moved from the house they had lived in for the last 50 years to a smaller, more convenient place.

No hassle with estate agents, banks, endless waiting to find a buyer, redecorating in the hope of attracting one, etc., they simply handed in the legal 3 month notice on their lease and moved.

The (legally controlled) rent they paid was ridiculously small compared to here, something around €400 for a 4 bedroom house in a suburb. They're paying a little less now and live more central, allowing them to give up driving.

Ok so they way I see it is if I buy know with a mortgage of 500 p/m for 30 years(just an example ) assuming a 2% per annum increase in inflation the equivalent in 2044 would be 954 per month and while the rent can go up in line with inflation or worse I would still be paying just 500 p/m.

Now I'm old I want to move great I can sell the house on downsize and have a huge lump sum to add to my pension and I don't have to pay any money each month to live somewhere.

TwoShedsJackson

Shenshen wrote: »

A friend of mine inherited her parent's house and she's seriously cursing them for the burden they left her with.

If it's such a crushing burden she can sign it over to me so.

everdead.ie

Chazz Michael Michaels wrote: »

In this country, that makes sense. In other, more advanced civilisations, it doesn't.

To be honest it seems to me you have more of an issue with the country than anything else. If you are unwilling to understand renting doesn't always suit everyone this argument will never end.

Guy:Incognito

Guy:Incognito wrote: »

I don't see why resprictions should be put on landlords beyond certain basics. If a person owns a house and wants to charge €10,000 a month to rent it, then that's their choice. If no one rents it, its the owners roblem Just like your local shop can charge €50 for a Mars bar if they want.

+1 to this. Landlords should be able to charge what people will pay.

Shenshen wrote: »

Why would you not be able to do that with a rented place, the way people across Europe do?
Once you have a long-term lease on the place, you can do whatever you want with it, short of burning it to the ground of course. Why would your kids not call it home? I always did?

Can you knock down walls inside or build on extensions etc, well why would you want to spend money on an extension for a house you don't own. I couldn't call it home as, like you said now someone else is living there you can't go back to the house you grew up in, a terrible thought in my mind.

Shenshen wrote: »

And yes, I can really see your children being happy inheriting a worn-down place in the arse end of nowhere which they will have to pay tax for and haven't a hope in Hades selling....
A friend of mine inherited her parent's house and she's seriously cursing them for the burden they left her with.

Why are you picking an example of a worn down place? Most people look after their house so you aren't going to get a worn down place.

A lot of people want to live in the house so selling it would not be an issue or else they would keep it as a holiday home. Not everyone wants to move away from the area they are from.

As for the tax, if they are getting taxed on it then its worth a fair bit and isn't a run down house in the middle of no where as there are reliefs up to about 250k from a parents to children. I never heard of anyone not one single person complain about being left a house as most people live in the houses they are left.

Shenshen

Guy:Incognito wrote: »

I don't see why resprictions should be put on landlords beyond certain basics. If a person owns a house and wants to charge €10,000 a month to rent it, then that's their choice. If no one rents it, its the owners roblem Just like your local shop can charge €50 for a Mars bar if they want.

"Property is responsibility"

One of the pillars of the German constitution.
If you rent out a place, you need to abide by laws that are in place to ensure tenants are not being exploited.

Shenshen

Guy:Incognito wrote: »

That's not the same thing that's being discussed, The thread is not about the merits of buying a house vs being in a council house.

I cant imagine the corpo are going to start building leafy estates with 4 and 5 bed houses to rent to professional couples cheaply any time soon.

Any private company is doing it to make money, much like a casino isn't there to send you home with full pockets.

It's not a council house.
It's a regular house in Germany, they don't do council housing.

Chazz Michael Michaels

Guy:Incognito wrote: »

That's not the same thing that's being discussed, The thread is not about the merits of buying a house vs being in a council house.

I cant imagine the corpo are going to start building leafy estates with 4 and 5 bed houses to rent to professional couples cheaply any time soon.

Any private company is doing it to make money, much like a casino isn't there to send you home with full pockets.

I'm pretty sure he means 'a' corporation. Not 'the' corporation.

Ush1

Shenshen wrote: »

"Property is responsibility"

One of the pillars of the German constitution.
If you rent out a place, you need to abide by laws that are in place to ensure tenants are not being exploited.

Where is the exploitation happening?

Guy:Incognito

Shenshen wrote: »

It's not a council house.
It's a regular house in Germany, they don't do council housing.

Chazz Michael Michaels wrote: »

I'm pretty sure he means 'a' corporation. Not 'the' corporation.

"A corporation" isn't losing money (unless theyre doing it wrong) so whatever your paying in rent is more than it costs to buy and maintain the property.

The discussion is about here though, where we do have council houses which is an alternative to private renting.

Imagine the same house but it had been bough by your grandparents 80 years ago. Your parents inherited it and then you do. 2 generations have just lived rent free.

Btw, up until bad financial decisions by my uncle (and my grandmother in letting him near the deeds) my family owned a 3 story over basement house with a 2nd separate bungalow that they rented out in Germany. Following my grand fathers death in the Early 80's my grandmother lived alone in one of the apartments. After said financial decisions shes been renting elsewhere now for the last 20 years and cursing not still having the house.

jane82

Since person a has been renting house prices went from 500 000 to 200 000.
In these 5 or so years he spent 1200 a month on rent.
In these say 8 years he spent say 115 000 on rent.
He made a saving of 75 000.
He didnt saddle himself up with maybe 200 000 interest. He didnt have to pay to maintain his property.

Dead money indeed.

Shenshen

Guy:Incognito wrote: »

Why doesn't she sell it for €20,000 then? You'll always sell something at the right price.

Ever heard the term "inheritance tax"?

Shenshen

Guy:Incognito wrote: »

"A corporation" isn't losing money (unless theyre doing it wrong) so whatever your paying in rent is more than it costs to buy and maintain the property.

Imagine the same house but it had been bough by your grandparents 80 years ago. Your parents inherited it and then you do. 2 generations have just lived rent free.

The house was built about 100 years ago. Whatever the corporation spent building it has long been covered by the rent they collected in that time.

My parents don't live in the same town my grandparents live in, and neither do I. What use would it have been to any of us?

Ush1

Shenshen wrote: »

Ever heard the term "inheritance tax"?

So what? She will still make some amount of money on it if she sells it, even if it's 1 shiny cent.

Then her tax problem is gone.

Alun

Shenshen wrote: »

It was one of the first big shocks when I came over here, the amount people would charge you to rent a place and the practically non-existent tenant protection laws.

This is key ... in Germany, and the Netherlands too, you can rent but still make the place you're renting a home by decorating it the way you like and even making major improvements as many people will rent over extended periods, so don't mind doing such things, even if they potentially lose them when they move. Here you're pretty much stuck with magnolia walls, and incurring the wrath of the landlord if you dare even to stick a nail in the wall to hang a painting on.