is buying really cheaper than renting?

Lumen

Point in time comparisons between owning and renting (even when done properly, i.e. comparing rent to interest burden + cost of holding) miss the more important considerations.

- If you want to eventually own your own home you have to start at some point.
- Buying a home is largely locking in your costs and accommodation for a long period of time (although those costs can vary a little with interest rate movements). This is either welcome stability or a ball and chain, depending on whether your circumstances change.

Right2Write

BoatMad wrote: »

which is why long term home renting should be like conventional commercial leases , our issue here is the short-termism in renting and the largely amateur landlords. We need to drive out the amateur landlord

Couldn't agree more - the amateur landlord in Ireland with one or two properties is a curse. They should be driven out by government measures and we should encourage instead much larger financial entities who look very long term at stable and modest returns.

david75 wrote: »

I have friends same friends that we all probably have, that have second and third properties and they rent them out and it pays their mortgage and then some.

I still believe these people are the problem. Am I wrong?

They are the problem - 'gombeen men'.

Lumen wrote: »

Buying a home is largely locking in your costs and accommodation for a long period of time (although those costs can vary a little with interest rate movements). This is either welcome stability or a ball and chain, depending on whether your circumstances change.

This is the point. The OP though is in a special position in that they appear to be able to save at quite a steady rate as well as rent temporarily. If I were them, I'd continue to rent and save. Then either choose to buy when they can either avoid / minimise their mortgage or if the 'house of their dreams' becomes available.

pilly

Right2Write wrote: »

Couldn't agree more - the amateur landlord in Ireland with one or two properties is a curse. They should be driven out by government measures and we should encourage instead much larger financial entities who look very long term at stable and modest returns.



They are the problem - 'gombeen men'.



This is the point. The OP though is in a special position in that they appear to be able to save at quite a steady rate as well as rent temporarily. If I were them, I'd continue to rent and save. Then either choose to buy when they can either avoid / minimise their mortgage or if the 'house of their dreams' becomes available.

The government are already forcing out the small LL and believe me it's only going to make things worse.

You do realise that 70% of LL's in Ireland are small LL's. You honestly think this is going to be replaced. By what?

D0NNELLY

If you think rent is expensive, try paying it out of a pension. Mortgage for 25yrs then rent/mortgage free.

murphaph

Right2Write wrote: »

Couldn't agree more - the amateur landlord in Ireland with one or two properties is a curse. They should be driven out by government measures and we should encourage instead much larger financial entities who look very long term at stable and modest returns.

Be careful what you wish for. You are advocating a drastic reduction in the number of suppliers which would leave many areas with landlord monopolies or (in the case of rural Ireland as large REITs have no interest in maintaining one off properties) you are looking at having no landlords and no rental properties at all.

Once a handful of institutions control vast swathes of housing, then you'll see lobbying like you've never seen before from the, in comparison puny IPOA.

Samuel T. Cogley

Right2Write wrote: »

Couldn't agree more - the amateur landlord in Ireland with one or two properties is a curse. They should be driven out by government measures and we should encourage instead much larger financial entities who look very long term at stable and modest returns.

Yes comrade that's exactly what they'll do. Modest returns.

They absolutely will not throw a gym in the place and charge 33% above market rate for 'luxury apartments with world class facilities'. There is absolutely no chance that a few large companies won't take aim at pieces of tenant protection legislation by getting the aborted by lobbying or by taking cases in the courts in the way us gombeens never could.

They will absolutely pay an effective 40-50% tax.

Never was there a more apt application of the expression 'be careful what you wish for'.

Parchment

Our mortgage is 200-300e cheaper a month than renting a similar house in our city. Its funny our bills are less then when we lived in an apartment with inefficient heating.

Overall its worked out well for us but we havent had (touch wood) some big cost just yet like a boiler going etc. Then renting becomes cheaper as you call the landlord and get it sorted.

sbsquarepants

regi3457 wrote: »

yes and I suppose the 1500 or more would go into your savings if you didn't rent. Hmmm, maybe the real and only value in buying is actually being able to live in your own home which is nice but does it make it cheaper than renting, not so sure anymore. I do see that people do have a pressure to buy asap perhaps it gives them some false sense of security or perhaps they just really believe that renting is more expensive.

Not true.

Say you are 30 years old (normal enough age to be thinking about buying a house)
You probably have 50 years left - you can buy, pay your mortgage over 25 - 30 years and then retire mortgage free all going well, and have a little nest egg to leave your kids, or you can rent for 25-30 years, and then need to rent for 20-25 years more.

Buying is vastly preferable to renting in the long term, in my opinion. It's so obviously better that I'm amazed people even bother asking the question.
Long term is the key, it may well be better to rent for the next year or 5 years, but over your lifetime it's better to buy. I don't want to reach 70 and have to move to some shít hole because I can no longer afford to rent "my" home.

daheff

david75 wrote: »

From Germany up through all the Scandinavian countries renting is the MO.
We have a hangover about property thanks to the brits.

People dont realise that the main reason people rent in these countries is because they can't afford to buy property in the area they want to (ie where the jobs are). Same problems as we have...too many chasing too few properties in the right areas....solution is to rent where they want to live. Because they have much better rights as tenants than in Ireland (eg in Germany you get given an empty shell of an apartment -you furnish it, you bring your own kitchen. You leave, you put it back into the same condition as you got it in) people are happier to rent as they know the prices wont change crazily or they'll be thrown out on their ear at a moments notice.

bad_badger wrote: »

ireland is extremely pro tenant , making it more pro tenant wont increase supply

nothing is expected of tenants at all in terms of the legislation brought in this past number of years , its all on the landlord

We sure arent as pro-tenant as you'd like to think.

Parchment wrote: »

Our mortgage is 200-300e cheaper a month than renting a similar house in our city. Its funny our bills are less then when we lived in an apartment with inefficient heating.

Overall its worked out well for us but we havent had (touch wood) some big cost just yet like a boiler going etc. Then renting becomes cheaper as you call the landlord and get it sorted.

Same here. Bonus to owners is that if your boiler goes, you can decide what to get. when to get it (subject to you having money). Landlord might try get it fixed on the cheap on you.


OP -long term paying a mortgage (buying a house) vs paying rent is a no brainer. On a like for like comparison your mortgage has a definite end date and you have somewhere to live (an asset). For Rent you either pay for ever or you stop (and have nowhere to live).

Lumen

bad_badger wrote: »

ireland is extremely pro tenant

No, Ireland is pro-occupant.

There are owner occupiers living in houses they've haven't paid the mortgage on in many years.

Tenants get a worse deal than owner occupiers.

jimmycrackcorm

daheff wrote:

We sure arent as pro-tenant as you'd like to think.

There is effectively no come back for landlords if a tenant overholds, even threshold have been known to suggest such an action.

daheff wrote:

Same here. Bonus to owners is that if your boiler goes, you can decide what to get. when to get it (subject to you having money). Landlord might try get it fixed on the cheap on you.

I'm saving 500 pm in comparison to renting. A new boiler is less than the equivalent of 4 months savings. I'll have to do it at some point as it is nearly 20 years on the go.

Also I think people need to view house prices in the context of decades rather than focus on a price crash. I've only a few more years left on my mortgage, I won't be worrying about how will I pay to live somewhere when I retire.

BrokenArrows

regi3457 wrote: »

We live in a house and were just having a look around at potentially buying a house in Ireland. We were more window shopping than anything and looking at numbers to see just how much cheaper buying is supposed to be.

We rent in co Laois in a house worth around 180 000 euro. We saw a similar nicer house but farther out of town for the same price. If we were to put down a 10% deposit and take out a mortgage with BOI the bank rep said our repayments (variable) would be 900 euro which is what we pay in rent at the moment. Now I know your repayments initially are mostly interest so when you make your payments over the first 5 years you pay the bank just the same as I pay my landlord right? Also with a mortgage don't you need additional insurance? I don't know how much that can be but surely that would make the repayments and insurance much higher than the rent payment we make each month right now?

I must add that in our case we would have the means to save up the full 180k in 5 years so we could cancel our mortgage early hypothetically speaking but in the interim from now until 2022, would it be wiser to keep renting or to buy a house? It seems to me that we would have the full 180k sooner if we carried on renting but maybe I am missing something. Anyone care to tell me what I am missing? I suppose property goes up over time but not always so surely speculating about this is not the way to go.

Buying a house is cheaper assuming the value of the house stays the same or increases.

I just bought a house with repayments 20% higher than my rent, but i was renting an apartment.

Extra expenses that ownership has:
1. House Insurance - Its not much but its something. We pay 90 per year excluding contentents insurance. Insurance is optional.
2. Decoration, fixtures, fittings, furniture. You have to pay for everything to make the place liveable, while renting a furnished place you dont have to pay for the stuff.
3. Paying for breakages. Things break, pipes, fridges, ovens, chairs etc.
4. Property Tax (Ireland), Council Tax(UK)


In the short term its more expensive, however a % of your monthly mortgage payments goes against paying off the capital, so its essentially a savings account that you cannot access until you sell your property.

mickoneill31

D0NNELLY wrote: »

If you think rent is expensive, try paying it out of a pension. Mortgage for 25yrs then rent/mortgage free.

I think what you're meant to do is increase your pension contributions to account for this if you don't buy.
I don't know how many do though.

pilly

BrokenArrows wrote: »

Buying a house is cheaper assuming the value of the house stays the same or increases.

I just bought a house with repayments 20% higher than my rent, but i was renting an apartment.

Extra expenses that ownership has:
1. House Insurance - Its not much but its something. We pay 90 per year excluding contentents insurance. Insurance is optional.
2. Decoration, fixtures, fittings, furniture. You have to pay for everything to make the place liveable, while renting a furnished place you dont have to pay for the stuff.
3. Paying for breakages. Things break, pipes, fridges, ovens, chairs etc.
4. Property Tax (Ireland), Council Tax(UK)


In the short term its more expensive, however a % of your monthly mortgage payments goes against paying off the capital, so its essentially a savings account that you cannot access until you sell your property.

90 a year house insurance??? I'd love that deal. Mine was €560 last year.

murphaph

Lumen wrote: »

No, Ireland is pro-occupant.

There are owner occupiers living in houses they've haven't paid the mortgage on in many years.

Tenants get a worse deal than owner occupiers.

And landlords get a worse deal than both.

Right2Write

We own our house now. Did what OP was querying. Saved and avoided the mortgage trap. We own one house, why would we want another except maybe as a holiday gaff and even that is wasteful. You can only live in one house, so we have one house.

But as a renter, we experienced a few 'amateur landlords' and our children now have the same experience. Maybe we've been unlucky but 8/9 out of 10 of those experiences would have left a bad taste in the mouth. People taking advantage, dishonestly pocketing cash, trying to keep deposits and so on. We also experienced a fair amount of the same behaviour when we went to buy a property, both from sellers but more so estate agents. It's dog eat dog in their world - I wouldn't ever trust an auctioneer or estate agent. The truth seems to be variable in their universe.

Basically from the ordinary person's POV, the Irish property market stinks - lots of people taking advantage of others. We're a greedy lot on the whole.

wordofwarning

Right2Write wrote: »

But as a renter, we experienced a few 'amateur landlords' and our children now have the same experience. Maybe we've been unlucky but 8/9 out of 10 of those experiences would have left a bad taste in the mouth. People taking advantage, dishonestly pocketing cash, trying to keep deposits and so on.

Well in 2017, you have the luxury of paying a massive premium to rent from a REIT. They are professionals in name, but not in practice. You can Google what tenants have thought of renting from them.

I honestly don't know why people think a US based REIT will be care more about a tenant well being than a small Irish landlord. Maybe in a few years, when people realise that they are paying €2500 for a 2 bedroom apartment from a REIT, when the same spec apartment from a 'amatuer landlord' is €1,800 next store for pretty much the same standard of service. Then maybe the allure of 'professional landlords' will finally fade

The_Conductor

And you have the REITs stuctured to pay little/no tax whatsoever- versus an Irish landlord who is taxed on rental income as 'unearned income' and crucified over it.

Buying can be cheaper than renting- but a lot of people look at this with the most incredible of rose tinted lenses. You have entire generations condemned to living in inappropriate accommodation- because they had to buy a 'starter home' at any cost to 'get on the property ladder'. Many of these were encouraged to do so by politicians- and indeed, some of the 'experts' who were habitually held up as people who could be trusted to save people money had not the most altruistic of intentions (with a few exceptions- I've a small article on Tom O'Higgins from 2000 framed on my wall- which I look at whenever I feel I need a boot in the gonads).

People just don't understand the undercurrent in the Irish psyche- to own property at any cost- regardless of suitability- and that term 'rent is dead money' seems to be hammered into people at a very young age.

Rent is *not* dead money- its paying for a service- and even today- in our ridiculous rental market- it will cost you significantly less to rent a comparable property than to buy it- in most but not all cases (you have to factor improbably low interest rates into the equation to make buying stack up- and thats certainly not going to last).

Guys- life is short- and is for living. Tying yourself in knots- just to own property- for 35-40 years- is nutty. I know where I probably will be in 40 years time- under 6 feet of stony cold clay- but in 20 years time- I'd like to be enjoying a mug of coffee, watching the sun rise over the Atlantic- before I started my morning walk on the silver sands of a Portuguese village beach- somewhere north of Lisbon, and I don't intend to own any property whatsoever. Next time there is a downturn of any significance- I'll sign over all my worldly goods to my kids- with a lifetime right of residence for myself- to minimise inheritance tax, cgt etc etc.

I'm not particularly old- but I'm tired of seeing people spend their entire lives chasing silly dreams, instead of living, and ending up owning property- sometimes lots of it- but bitter old people who haven't managed to use their short time on this earth to actually do something.

Life is for living- and its damn short. It behoves us- to actually live it..........

CruelCoin

Afte repairs, general upkeep, interest etc, the monthly outgoings are roughly the same, but here's thing: If you buy you have an asset at the end, for the same monthly outlay!

No-brainer. Long term you're better off buying.

alastair

The_Conductor wrote: »

And you have the REITs stuctured to pay little/no tax whatsoever- versus an Irish landlord who is taxed on rental income as 'unearned income' and crucified over it.

Buying can be cheaper than renting- but a lot of people look at this with the most incredible of rose tinted lenses. You have entire generations condemned to living in inappropriate accommodation- because they had to buy a 'starter home' at any cost to 'get on the property ladder'. Many of these were encouraged to do so by politicians- and indeed, some of the 'experts' who were habitually held up as people who could be trusted to save people money had not the most altruistic of intentions (with a few exceptions- I've a small article on Tom O'Higgins from 2000 framed on my wall- which I look at whenever I feel I need a boot in the gonads).

People just don't understand the undercurrent in the Irish psyche- to own property at any cost- regardless of suitability- and that term 'rent is dead money' seems to be hammered into people at a very young age.

Rent is *not* dead money- its paying for a service- and even today- in our ridiculous rental market- it will cost you significantly less to rent a comparable property than to buy it- in most but not all cases (you have to factor improbably low interest rates into the equation to make buying stack up- and thats certainly not going to last).

Guys- life is short- and is for living. Tying yourself in knots- just to own property- for 35-40 years- is nutty. I know where I probably will be in 40 years time- under 6 feet of stony cold clay- but in 20 years time- I'd like to be enjoying a mug of coffee, watching the sun rise over the Atlantic- before I started my morning walk on the silver sands of a Portuguese village beach- somewhere north of Lisbon, and I don't intend to own any property whatsoever. Next time there is a downturn of any significance- I'll sign over all my worldly goods to my kids- with a lifetime right of residence for myself- to minimise inheritance tax, cgt etc etc.

I'm not particularly old- but I'm tired of seeing people spend their entire lives chasing silly dreams, instead of living, and ending up owning property- sometimes lots of it- but bitter old people who haven't managed to use their short time on this earth to actually do something.

Life is for living- and its damn short. It behoves us- to actually live it..........

Chased the silly dream of owning a house in Dublin after renting for years. This was 1997. Admittedly it meant being anchored in the one location for the last 20 years, but that location was where the work was in any case, and there's been no shortage of travelling over that time, so little in the way of being tied up in knots. The mortgage is, and has been, a divisor of rental costs on an equivalent property for years. Frankly I probably couldn't afford to pay the sort of rent that the place would fetch. The mortgage ends next month. I'm with you on retiring to a nice sunny spot, but all that would involve is flogging the gaff, or renting it out for six months a year. YMMV, but buying (and associated overheads) has proven to be the more affordable option in our case. We were lucky to get in ahead of the bubble/negative equity years, but we also paid higher interest rates as we didn't have a tracker, never came within an asses roar of being unable to live our lives. Owned the house for 20 years now, and plan on being around for at least another 40, so not sure where the 35 years thing comes from?

regi3457

regi3457 wrote: »

Zubeneschamali wrote: »

Long term, buying is obviously cheaper - rental properties are bought and rented out to make money - if renting was cheaper than buying, all landlords would lose money all the time, and soon there would be no rented property.

However, this is only true on average and in the long term. Something like the 2008 crash can leave you stuck in negative equity if you bought, where a renter might see rents drop or at least stop rising. You might buy at the top and have to sell at the bottom, and lose a packet. It is an investment, and value may go down as well as up.

And if you need to move/sell often, the transaction costs of buying and selling might not make sense.

long term for sure but if you had a 5 year plan as we do? then maybe it works out to about the same excluding speculative property price increases/decreases

The obvious and most sensible thing to do (imo) is to buy now and over pay the mortgage at close to the rate you intend at saving at (of course it's wise to save a little extra also) and pay it off in around 5 years. You get the best of both worlds in this way. You own the property in a short time frame but also don't have to live in a rented place.

You are also making the assumption that the property price wont have increased in 5 years and that your rent won't have increased (both very unlikely not to increase) and many other factors that could be critical.

pilly

The_Conductor wrote:

I'm not particularly old- but I'm tired of seeing people spend their entire lives chasing silly dreams, instead of living, and ending up owning property- sometimes lots of it- but bitter old people who haven't managed to use their short time on this earth to actually do something.

Very rosy view but how do you pay for this living in Portugal on a pittance of a pension?

pilly

pilly wrote: »

The_Conductor wrote:

I'm not particularly old- but I'm tired of seeing people spend their entire lives chasing silly dreams, instead of living, and ending up owning property- sometimes lots of it- but bitter old people who haven't managed to use their short time on this earth to actually do something.

Very rosy view but how do you pay for this living in Portugal on a pittance of a pension?

And living in Portugal is not everyone's "dream". Wouldn't interest me in the slightest and I'd far rather own a property which I had paid off and living in.

pilly

Ray Many Dandruff wrote:

And living in Portugal is not everyone's "dream". Wouldn't interest me in the slightest and I'd far rather own a property which I had paid off and living in.

Don't get me wrong I'd love to retire somewhere sunny, just don't see it happening.

Yourself isit

pilly wrote: »

Very rosy view but how do you pay for this living in Portugal on a pittance of a pension?

He's got a lot of wealth in property to sell off.

Samuel T. Cogley

Yourself isit wrote: »

He's got a lot of wealth in property to sell off.

Keep it up Ireland... Keep it up!

http://www.daft.ie/france/overseas-houses-for-sale/pays-de-la-loire/vende/plissanne-vende-951661/

The_Conductor

Yourself isit wrote: »

He's got a lot of wealth in property to sell off.

I was going to say 'I wish'- but in all honesty, I don't.........
I have my own home in a nice suburb of Dublin which I will sell in due course- and thats it.

As for why Portugal- honestly- my Portuguese, while not fluent, is far better than my French or Italian, I don't have any Greek- and I've been ill most my life- and would like a few years of peace and quiet in the sun if/when the opportunity arises.

An Irish Contributory Old Age Pension of 13k - is akin to the net pay for a teacher in Portugal- if they can live on it- I don't see why I can't.

Samuel T. Cogley wrote: »

Keep it up Ireland... Keep it up!

http://www.daft.ie/france/overseas-houses-for-sale/pays-de-la-loire/vende/plissanne-vende-951661/

295k for that? The only thing I'd change- is add a bathroom or two- but its remarkable what you'll get for your money. One downside to buying in France- is the tax code- its even worse than Italy- Portugal- I could make work a lot better.

Anyhow- I've gotten diverted, dreaming of preparing a nice breakfast in that kitchen, relaxing and taking my time to get to the pool......... I know the Loire valley can be pretty interesting in the autumn/winter- then again- so too can much of Portugal.

Ireland really is nuts- its quite incredible that it functions as a modern society.......

jamesthepeach

Samuel T. Cogley wrote: »

Keep it up Ireland... Keep it up!

http://www.daft.ie/france/overseas-houses-for-sale/pays-de-la-loire/vende/plissanne-vende-951661/

I want it
WIll you take offers?

Ive been turned upside down with renting in the last few months both as a landlord and as a tenant.
I was renting close to where I work and had rental properties, then living in the home at the weekend.
Now my landlord is going airbnb, i have to get out. I was originally going to move into one of my apartments and commute (it would be the commute from hell).
Now im thinking I'll quit the job (I like it and it pays way more than it should be paying) sell the two apartments and live happily with the family and forget this work lark altogether for a few years.

I totally dont know what to do, but im leaning towards just jacking it all in and moving to France or Spain. We lived in Spain for a couple of years a long time ago. Still have an apartment there, but its too small to live permanently in for all of us. More buying and selling and trader upping.

It never ends.
Jack the job, sell everything, rent somewhere warm and chill.
Oh, thats retirement. Im thinking of retiring ha ha.
I didnt think id be retiring ti l at least 50, but its looking like a good idea now all of a sudden.
I must run the numbers and see how that pans out.

But the point of my side tracked, dream laden post there was that sometimes buying is just too complicated. The simple life of renting has its merits even if it does turn out to be more expensive in the long run. But being a landlord is too complicated and just not worth the effort now. It basically a sequence of traps and booby traps for a landlord. My advice as someone who has been a tenant, a landlord, an owner occupier ....
Just rent. Dont own property, and 100% dont be a landlord.

The_Conductor

jamesthepeach wrote: »

It never ends.
Jack the job, sell everything, rent somewhere warm and chill.
Oh, thats retirement. Im thinking of retiring ha ha.
I didnt think id be retiring ti l at least 50, but its looking like a good idea now all of a sudden.
I must run the numbers and see how that pans out.

But the point of my side tracked, dream laden post there was that sometimes buying is just too complicated. The simple life of renting has its merits even if it does turn out to be more expensive in the long run. But being a landlord is too complicated and just not worth the effort now. It basically a sequence of traps and booby traps for a landlord. My advice as someone who has been a tenant, a landlord, an owner occupier ....
Just rent. Dont own property, and 100% dont be a landlord.

You and me both.
I will be selling my PPR in Dublin- in due course- and simply signing over other property to my kids- and making damn sure I can live off the COAP- and I do speak Portuguese- which is partially where I was coming from with my earlier post.

Being a landlord is a fools game in Ireland- its a whole lot of work and misery for very little return- the main beneficiary of renting in Ireland- is not the tenant, and is most certainly not the landlord- its the Revenue Commissioners- the galling thing is that the largest landlords in Ireland are allowed to operate without paying tax at all- the REITS in particular come to mind. The whole taxation of rental income needs to be reformed- the manner in which it is treated as 'unearned income' while simultaneously there is allowance for different classes of landlords- is inequitable- and divisive. My own personal preference is for a new model for dealing with income from residential lettings- whereby there would be a flatline deduction from gross rent due to the Revenue Commissioners- in an identical manner- from *all* landlords (set it at 25% or whatever percentage you like)- and ideally- I'd like to see this ploughed back in social housing, nursing home places and LPT deductions for everyone.

However- I've now strayed so far from the original question asked at the outset of this thread- so I'm stopping right now.

pilly

The_Conductor wrote:

I was going to say 'I wish'- but in all honesty, I don't......... I have my own home in a nice suburb of Dublin which I will sell in due course- and thats it.

That was my point though. Your post was telling people not to get obsessed with owning a home but if you didn't own that home you wouldn't be able to afford to move to another country.