oh dear: Thinking of buy-to-let? Do the sums

[AtW]

Time will tell who is right, myself I am pleased with the fact that I am not exposed to property bubble consequence of which could be seriously fked up life for a very long time.

[shaunbhoy]

it makes more long term sense to buy than it does to rent (if you are looking at staying in the same area for the forseeable future).

You know that and I know that Ardesco. However, trying to get that logic to permeate the darkest depths of AtW's miniscule brain is a complete exercise in futility. He knows even less about the property market than he does about Cricket, and you could write THAT down on the back of a matchbox using lipstick!!

[AtW]

Ignore shaun - he is just uptight every since I have conclusively argued that Columbian Hostages should have attempted mass escape rather than wait to get beheaded on video.

[shaunbhoy]

Ignore shaun - he is just uptight every since I have conclusively argued that Columbian Hostages should have attempted mass escape rather than wait to get beheaded on video.

That would be the Colombian Hostages that didn't bother attempting a mass breakout, and were all released unharmed would it?
No, the only thing you proved in that thread was that you understand nothing about survival techniques. Much the same as you have more recently displayed regarding football and cricket, not forgetting the Property
Market of course!

[AtW]

Talking of other sports - it has just occurred to me that it is necessary to prevent cheating in bowling, darts etc by setting up laser beams that could cut off anything going past the line unless its an authorised object (ball or dark).

[oraclesmith]

Time will tell who is right, myself I am pleased with the fact that I am not exposed to property bubble consequence of which could be seriously fked up life for a very long time.

You are exposed to the property bubble in that you are paying a rent which is in line with the mortgage or investment return that the landlord requires. If the interest rate rises by a significant amount, the chances are that all rents will increase quite steeply as well as more people step off the property ladder and landlords have greater costs. You may win if there is an oversupply of rental property on the market, because this means there will be a lot of short term competition for renters and possibly some medium term shedding of buy-to-let property.

The process of buying and selling also erodes profitablility for those in the market, so you make a small gain there, providing your looking at a short term locate. If you're in it for the long term however (ie. in the UK for say 20 years) then you will definitely be better off buying, especially if you regularly have sizeable sums to pay off capital lending.

[AtW]

You are exposed to the property bubble in that you are paying a rent which is in line with the mortgage or investment return that the landlord requires.

No its not! That's the real market bit here - people who pay rent simply can't afford to pay much more, because rent is up front, you can't play accounting tricks by say increasing morgage period from 20 to 30 years thus being able to afford more money borrowed.

Rent in Brum practically did not change from 2000, in fact I'd say it lowered a bit, certainly if you take inflation into account. At the same time house prices doubled, which, if you were right, should have lead to doubling of rents.

[oraclesmith]

No its not! That's the real market bit here - people who pay rent simply can't afford to pay much more, because rent is up front, you can't play accounting tricks by say increasing morgage period from 20 to 30 years thus being able to afford more money borrowed.

Rent in Brum practically did not change from 2000, in fact I'd say it lowered a bit, certainly if you take inflation into account. At the same time house prices doubled, which, if you were right, should have lead to doubling of rents.

But in those days, the concept of buy-to-let was a relatively new one. I read a book about a guy who made loads of money in that period out of buy to let, but he admits that he would find it much more difficult to find the right yields nowadays. If, as is happening, a lot of people get into buy-to-lets as a sort of pension, where they have a mortgage to pay on the property as well, then they will need to cover their mortage payments from the rent. If they can't do that, they're in trouble and they will probably have to sell up, thus contributing to the depression in house prices in the process.

[AtW]

But in those days

That's just 5 years ago - there were plenty places for rent, for example I think it was pretty much standard business model for asian immigrants: get corner shop, or house that can be rented out.

It is probably more BTL now than there were 5 years ago, but its not the point. The point is that just because some people overstretch themselves and get huge morgages, they can't automatically pass it over to renters simply because renters can't afford it and would need to pass increase in rent onto getting salaries: now that's not doable because even those who get morgage up to their neck can't get increase in salary, they have to use bigger leverage - longer morgages: this is not an option for renters, which is why rents won't change much.

However a fked up country like Russia would behaive exactly like you suggest - Moscow's house prices like doubled in 18 months and all of a sudden rents double too sometime this year, no slow increases, no contract protection no nothing, they just double rent: take it or leave it, very much Russian fked up way of doing things, thankfully this kind of crap is not possible here.

[expat]

In my opinion buying is definetly the way to go if you are looking at it long term.

And if I am looking at SE England for 2 years? Buy or rent?

Few here have the answer to that, because (a) most can't see beyond their own situation, if that far, (b) most here have a dogma to propound rather than an analysis to make, (c) people generally advise me to change my entire life-plan in order to fit in with the schemes they think are clever, rather than think about which accommodation financing option would best suit my life.

No, for me it's horses for courses: buy for long term, rent for shorter term. And it's house for life, not the other way around.

That's for your home. For investment, Do Your Own Research.