Is it time to be content with renting and not have notions of buying ?

donkeyoaty0099

donkeyoaty0099 wrote: »

Give me a binding 10-20 year lease with predictable and capped rent increases and I'd be delighted to rent long term.

There won't be many that would though. The main argument for renting over buying is for people who are not going to stay in a place long term hence why short term leases suit most. Why someone planing to stay in a place 10 or 20 years would want to sign up to a long term lease is beyond me. It's far from impossible to expect to have a mortgage fully or nearly paid off inside 20 years which makes renting for that long madness, especially considering the rent is almost definitely more than the repayment as this stand at the moment.

Milly33

Do you actually really own it in the end.. Like what happens when you can pay the rest of the mortgage or you die and your family member cant take over the payments... Before granted fine but there are too many rules and regulations about what you can and cannot do in this day and age.

I don't get why people are in such a rush to buy, fine it is great to be able to do what you want with a place but also you take on a lot more than that.. Think it is ruining young people today

hopgog

Maeve Tiny Jeans wrote: »

There won't be many that would though. The main argument for renting over buying is for people who are not going to stay in a place long term hence why short term leases suit most. Why someone planing to stay in a place 10 or 20 years would want to sign up to a long term lease is beyond me. It's far from impossible to expect to have a mortgage fully or nearly paid off inside 20 years which makes renting for that long madness, especially considering the rent is almost definitely more than the repayment as this stand at the moment.

They expect to break the lease if it suits them. To the renter the lease doesn't matter if they want to go.

beauf

handlemaster wrote: »

I don't think rent control is an overly bad proposal but when tenants are in a place for 20/30 years and paying pennies the Landlord is not going to be encouraged to carry out repairs etc as time goes buy the repairs costs continue to go up but rent remains the same. Also I think Landlords wouldn't mind taking lower rent if actual aggreed rent was guaranteed to be paid and the property was properly looked after by tenants.

No offence but its an idea with serious flaws.

A tenant is not qualified to carry out repairs. They may even cut costs and the LL has no idea what has been done to electrics, plumbing etc. They may even cause damage that the LL then has to fix to meet regulations, or for the next tenant. Damage that exceeds the deposit. They may not even have insurance if they get injured doing the work.

Something simple as painting can be done badly. What happens if a tenant paints over a varnished door in some mad colour that no other tenant wants. What if it starts peeling after a few months because it wasn't done properly.

There will be disagreements about the value of such work, the tenant will over estimate, the LL under estimate. In short its not a normal LL/Tenant relationship and is fraught with difficulties for both parties.

Its hard to get qualified tradesmen to do a job properly never mind an amateur.

hopgog

Milly33 wrote: »

Do you actually really own it in the end.. Like what happens when you can pay the rest of the mortgage or you die and your family member cant take over the payments... Before granted fine but there are too many rules and regulations about what you can and cannot do in this day and age.

I don't get why people are in such a rush to buy, fine it is great to be able to do what you want with a place but also you take on a lot more than that.. Think it is ruining young people today

You have to take life insurance to cover the house value if you die, your next of kin get the house if you pass. If you can't pay the rest of the mortgage you can leave if it's half way through you won't be in neg equity so it's like you have rented but might get some money back. If in neg equity bankrupt and it's justlike you rented for those years

beauf

Even if you inherit a place you may not be able to afford the up keep, or pay the taxes without selling it. People will start to move way from large properties (and mortgages) that attract crippling taxes and costs.

How many people with pyrite issues, or flooding, or Priory hall or simply bad building standards wish they were renting so they could move away from the problem and not be robbed of their life savings because the govt does not protect them.

http://www.irishtimes.com/news/crime-and-law/courts/victims-of-abysmal-building-practices-awarded-1-09m-1.1682551

Milly33

hopgog wrote: »

You have to take life insurance to cover the house value if you die, your next of kin get the house if you pass. If you can't pay the rest of the mortgage you can leave if it's half way through you won't be in neg equity so it's like you have rented but might get some money back. If in neg equity bankrupt and it's justlike you rented for those years

Still crap though in fairness you are putting a lot of pressure on family if this is the case... Honestly speaking I think people who are adamant to buy haven't looked at the pros and cons or both first

beauf

Maeve Tiny Jeans wrote: »

.... It's far from impossible to expect to have a mortgage fully or nearly paid off inside 20 years which makes renting for that long madness, especially considering the rent is almost definitely more than the repayment as this stand at the moment.

That's ignoring a whole load of things like need to save the deposit, get approval for a mortgage, not have a change of circumstance over that time period.

The Spider

Nonsense article, reads like it was written by someone in their twenties, fact is inflation means that mortgage payments reduce over the long term, for example in 1995 I rented a room in a shared flat between two of us on the northside of Dublin for 250 a month that was 500 for the flat, that 500 is now the equivalant of 964 euros a month, however the mortgage repayments would have remained at 500 a month roughly half the cost of renting.

And that flat was the top of a house with no seperate door to the couple renting the downstairs flat, it was literally the upstairs of a house with a kitchen shoehorned in, an apartment was way out of our budget.

http://www.hargaden.com/enda/inflation/calculator.html

rent will go up over the long term, mortgage repayments will go down, (if only I'd had the sense in my early twenties to come to this conclusion).

Why does everyone bring Germany into it? The reasons Germans rent is because World War 2 demolished 20% of the housing stock, that sparked on a social housing boom to house a country that's currency was in tatters as well as it's property.

http://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/

We are not Germany, it arrived at it's situation after over fifty years, read the above link, it has not and will not apply to Ireland unless there's a war that demolishes the country, it's a red herring every time someone points to what they do in Germany, it's arguable that they may have a better policy, but that policy was borne out of a country destroyed by war and inflation, really can't see how you'd apply that to Ireland.

Nucular Arms

Another thing i've considered about mortgages is that how many people, once they own the place stay in it for good?

Most people I would assume have several mortgages through their lives. They pay off one and then will rarely move to a cheaper home home than one they are currently in. The tendency would be to 'move up'.. It's called a property ladder for a reason.

And so no sooner have you paid off one house, or even still be in the middle of paying one off, when you decide to move to a bigger / nicer / more expensive place and just end up paying down more mortgage payments.

I often wonder how much different this is than renting.

Though I would concede that you probably end up with nicer homes in general if you are trading up the property ladder for long enough, or from a position of moderate wealth.

Milly33

With renting you see this would be possible... You can move up and you don't have to worry about things like the property tax, septic tank charge or this crap they came up with. A lot of rental properties pay for bins etc and they have to upkeep most of the appliance's its a win win

The Spider

Nucular Arms wrote: »

Another thing i've considered about mortgages is that how many people, once they own the place stay in it for good?

Most people I would assume have several mortgages through their lives. They pay off one and then will rarely move to a cheaper home home than one they are currently in. The tendency would be to 'move up'.. It's called a property ladder for a reason.

And so no sooner have you paid off one house, or even still be in the middle of paying one off, when you decide to move to a bigger / nicer / more expensive place and just end up paying down more mortgage payments.

I often wonder how much different this is than renting.

Though I would concede that you probably end up with nicer homes in general if you are trading up the property ladder for long enough, or from a position of moderate wealth.

It's called equity, if you sell the house for more than the price you bought it then the difference can be used to make a bigger down payment on the next property, so you own more of the next house you buy and if you're downsizing you may own the entire property, granted this only works in a couple of scenarios, house prices rising and being prepared in all likelihood to move further out.

witchgirl26

Grandpa Hassan wrote: »

That is the main reason.....to make somewhere your own. I'm in London now, and there is a large market for unfurnished places. Which by necessity would have longer leases. I rented unfurnished and have the place just how I like it. That unfurnished market doesn't seem to exist in Ireland, and needs to develop hand in hand with longer lease terms

If there were unfurnished places with long term leases, I would consider renting for longer. Yes ultimately I'd want to still own my own place but might put it off a bit & save more.

Milly33 wrote: »

Do you actually really own it in the end.. Like what happens when you can pay the rest of the mortgage or you die and your family member cant take over the payments... Before granted fine but there are too many rules and regulations about what you can and cannot do in this day and age.

I don't get why people are in such a rush to buy, fine it is great to be able to do what you want with a place but also you take on a lot more than that.. Think it is ruining young people today

I know my mam owns her house outright now & she's only in her early 60's. It means she feels secure as she's on a pension & doesn't have to worry about rental costs increasing or where she'll live. Also means she has an asset she can sell without liens should she need to cover nursing home fees. For her it's not about passing it on to any of her children but more security for her future.

As for trading up - the way I understand it can work (excluding negative equity issues currently), is that it's almost a transfer of the mortgage from one property to another. Therefore you really only take out one mortgage but the payments may increase a little if you increase the size of your property by moving to a larger one. I know that's what my parents did.

I don't think it's ruining young people today at all. I think with the boom, it was forgotten to a degree just what a commitment it is to own a house. Our attitudes just have to change a bit & see it as a commitment and investment rather than something we have to do. And understand that jumping on the property ladder with a 1 bed flat might not be the smartest plan. The need to think further ahead & go "if I did get stuck here for 15 years before I could sell, would it work".

hopgog

Nucular Arms wrote: »

Another thing i've considered about mortgages is that how many people, once they own the place stay in it for good?

Most people I would assume have several mortgages through their lives. They pay off one and then will rarely move to a cheaper home home than one they are currently in. The tendency would be to 'move up'.. It's called a property ladder for a reason.

And so no sooner have you paid off one house, or even still be in the middle of paying one off, when you decide to move to a bigger / nicer / more expensive place and just end up paying down more mortgage payments.

I often wonder how much different this is than renting.

Though I would concede that you probably end up with nicer homes in general if you are trading up the property ladder for long enough, or from a position of moderate wealth.

As long as you mortgage free by retirement it's all good. But I like small houses so am not planning to extend my mortgage.

Nucular Arms

The Spider wrote: »

It's called equity, if you sell the house for more than the price you bought it then the difference can be used to make a bigger down payment on the next property, so you own more of the next house you buy and if you're downsizing you may own the entire property, granted this only works in a couple of scenarios, house prices rising and being prepared in all likelihood to move further out.

I get that alright, but I just meant in terms of the actual 'ownership' of the home being the main thing people will claim is attractive about buying over renting, when it seems to to me that in a large majority of cases people never actually finsih paying off mortgages due to constantly using the equity to pump straight into a bigger mortgage.

I totally agree that it's cheaper etc. I just wonder about some peoples reasons or how they view it as different if you're still spending your life paying monthly for accomodation. (in a lot of cases)

The Spider

witchgirl26 wrote: »

And understand that jumping on the property ladder with a 1 bed flat might not be the smartest plan. The need to think further ahead & go "if I did get stuck here for 15 years before I could sell, would it work".

Agree with this, a lot of people bought these without thinking about the future. However location is key in a purchase like this, fo instance a 1 bed apartment close to Stephens Green wouldn't be a bad purchase, a one bed apartment in Jobstown would be ill advised.

ABC101

I think there are plus points and minus points to both sides of the coin.

However... I don't trust the Govt with the economy, or management of most public services.

IMO... it is only a matter of time before the economy gets thrown off the cliff again.

It could be 15 years time... however if you are renting, and well qualified... with a number of languages.... when the economy tanks... you can just up sticks and get out / emigrate.

I know of two young doctors.... who deliberately rented and last year emigrated to Ozz.

In addition conditions of employment appear to have changed, gone are the days of defined benefit pensions, jobs for life, Globalisation of the workforce etc etc.

There is a lot more uncertainity in life these days.

So perhaps.... leaving your options open is better than putting down roots? Although I accept leaving your extended family behind is easier said than done.

Whlie renting is not cheap in Dublin... it is still possible to rent a 3 bed semi for 700 / month in rural areas.

As a tenent... certain costs have to be provided by the land lord... service charges for apartments, property taxes, repairs to furniture, replacement of certain items i.e. washing machines etc.

I'm surprised that the Govt has not decided to impose benefit in kind taxes on tenents... and get Revenue to enforce it.

However I would be very critical of the Labour party, by shutting down bedsits... it forced something like 10,000 units to close... which put a lot of pressure on the rental market... which drove up rents for everybody. Then cutting rent allowance. FF who implemented taxation on a loss for private landlords... who are trying to get out of the market. This leaves the provision of rental property to larger corporations... who have more favourable taxation treatment by Revenue.

It also leaves the tenent.... at the mercy to foreign Boards of Management of these Corporations, who decide income has to be increase as the shareholders are demanding a better dividend.

I think Karl Deeter had an article in the SBP recently about it.

hopgog

Nucular Arms wrote: »

I get that alright, but I just meant in terms of the actual 'ownership' of the home being the main thing people will claim is attractive about buying over renting, when it seems to to me that in a large majority of cases people never actually finsih paying off mortgages due to constantly using the equity to pump straight into a bigger mortgage.

I totally agree that it's cheaper etc. I just wonder about some peoples reasons or how they view it as different if you're still spending your life paying monthly for accomodation. (in a lot of cases)

You are not going to get a mortgage that goes past 68, so they all are meant to finish then. As you become an OAP you will own outright your house and there is a huge security in have at least a roof over your head without having to pay rents that might increase forcing you out of your support area when you are most vulnerable

Nucular Arms

witchgirl26 wrote: »

I don't think it's ruining young people today at all. I think with the boom, it was forgotten to a degree just what a commitment it is to own a house. Our attitudes just have to change a bit & see it as a commitment and investment rather than something we have to do. And understand that jumping on the property ladder with a 1 bed flat might not be the smartest plan. The need to think further ahead & go "if I did get stuck here for 15 years before I could sell, would it work".

Agree completely. My brother was looking at buying some tiny ****hole recently and I asked him why he would want to live there. He looked at me like I had two heads and said it would just be an investment, you'd probably rent it out..

To my mind one of the only reasons you would buy a house is if you found somewhere you genuinely loved and intended staying in for the rest of your life.

witchgirl26

ABC101 wrote: »

I think there are plus points and minus points to both sides of the coin.

However... I don't trust the Govt with the economy, or management of most public services.

IMO... it is only a matter of time before the economy gets thrown off the cliff again.

It could be 15 years time... however if you are renting, and well qualified... with a number of languages.... when the economy tanks... you can just up sticks and get out / emigrate.

But that is the nature of economies world wide throughout the ages & can't be solely blamed on governments. The economy is a cyclical thing & what goes up will go back down. Now there are times it crashes harder than others but why live your life in sole preperation for the next economic downturn? Coz it is coming, I agree with that but I'm not putting my life on hold for it.

witchgirl26

Nucular Arms wrote: »

Agree completely. My brother was looking at buying some tiny ****hole recently and I asked him why he would want to live there. He looked at me like I had two heads and said it would just be an investment, you'd probably rent it out..

To my mind one of the only reasons you would buy a house is if you found somewhere you genuinely loved and intended staying in for the rest of your life.

I agree to an extent. My OH bought a house recently. Do I think we'll be in it in 30 years time? Probably not. But if the prices dropped and we couldn't sell, could we live happily in the house and the area, potentially having a family? Most definitely.

witchgirl26

Nucular Arms wrote: »

I get that alright, but I just meant in terms of the actual 'ownership' of the home being the main thing people will claim is attractive about buying over renting, when it seems to to me that in a large majority of cases people never actually finsih paying off mortgages due to constantly using the equity to pump straight into a bigger mortgage.

I totally agree that it's cheaper etc. I just wonder about some peoples reasons or how they view it as different if you're still spending your life paying monthly for accomodation. (in a lot of cases)

I don't agree that a large majority of people don't finish paying off their mortgage. As has been pointed out, banks won't lend for a term that goes beyond retirement age as it is a bad monetary decision for them. Most people I know who are coming to retirement age have either already paid off the mortgage or are planning to use a retirement lump sum to do so. Not everyone is on the lookout for a bigger, better house.

Because at the end of the day - you own it. It's yours. Someone can't give you 30 days notice to leave it without some default on your side (if still paying a mortgage). Why pay someone else's mortgage, when your own could be a similar amount and you get something at the end?

beauf

The Spider wrote: »

...it's arguable that they may have a better policy, but that policy was borne out of a country destroyed by war and inflation, really can't see how you'd apply that to Ireland.

Better policies don't apply to Ireland? Lots of advances in medicine, technology and even social changes follow wars. That doesn't make them invalid. I don't get your point at all.

beauf

witchgirl26 wrote: »

...Why pay someone else's mortgage, when your own could be a similar amount and you get something at the end?

Cost of ownership isn't simply the cost of the mortgage. Theres lots of costs, expenses and risk far beyond that.

http://www.caniretireyet.com/renting-vs-buying-true-cost-home-ownership/

beauf

witchgirl26 wrote: »

I agree to an extent. My OH bought a house recently. Do I think we'll be in it in 30 years time? Probably not. But if the prices dropped and we couldn't sell, could we live happily in the house and the area, potentially having a family? Most definitely.

Unless the costs exceed your income. or you need to move.

The Spider

beauf wrote: »

Better policies don't apply to Ireland? Lots of advances in medicine, technology and even social changes follow wars. That doesn't make them invalid. I don't get your point at all.

Sigh, the point is it took Germany a war that destroyed the country with a huge proportion of the country homeless to arrive at a situation where rentals were attractive to the populace, social housing boomed, germans couldn't buy houses because few had any money let alone the large deposit required by banks and the banks themselves weren't in a position to give out mortgage.

The government went on a huge social house building project to provide accommodation to the dispossessed at low state controlled rents, this is why people in Germany rent, it's part of their psyche because of the war.

Contrast that with Ireland where the psyche is very much connected to the land and owning your piece of it after absentee landlords, british rule etc, and you can see why there is a huge difference in attitudes towards renting here as opposed to Germany.

My point is that unless you have the conditions that affected Germany you can't make a nation of owners suddenly prefer renting, andbefore the war most Germans bought their houses.

witchgirl26

beauf wrote: »

Cost of ownership isn't simply the cost of the mortgage. Theres lots of costs, expenses and risk far beyond that.

http://www.caniretireyet.com/renting-vs-buying-true-cost-home-ownership/

I understand that - believe me. But at the end of the day I would still prefer to own an asset myself rather than helping someone pay off one that they'll own. Course it costs more than just the mortgage but there's a lot more security than renting where the longest lease is usually 1 year.

beauf wrote: »

Unless the costs exceed your income. or you need to move.

The mortgage has been based solely on one income and stressed tested on that basis so if one of us, god forbid, did lose our job then we could still afford the mortgage. As for moving - we're beside transport links into the city centre in Dublin and on the M50 too. Most likely we wouldn't be forced into moving somewhere. That's what I mean about looking long term and taking those factors into account.

beauf

its quite easy for one wage to be lost, the other reduced, at the same time costs all increase dramatically. Affordability is relative.

witchgirl26

beauf wrote: »

its quite easy for one wage to be lost, the other reduced, at the same time costs all increase dramatically. Affordability is relative.

And that's why they stress test you to the limit for mortgages. We are comfortably able to pay the mortgage, cost of living expenses, bills and are both able to save quite a good sum monthly should we need a nest egg in the future. Once again - planning for the future & not just diving onto the property ladder to get on there.

beauf

The Spider wrote: »

...My point is that unless you have the conditions that affected Germany you can't make a nation of owners suddenly prefer renting, andbefore the war most Germans bought their houses.

You don't need a war, its just needs to become unaffordable.

http://www.thejournal.ie/house-property-prices-ireland-578337-Aug2012/
http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201306.pdf