Reply to: How do people with normal jobs manage to live in London?

[bobspud]

Really, that's interesting... I've not been often but it seemed even crossing zone1 took 20+ minutes!

Crossing zone 1 is slow because of the number of people that get on and off. once you are out of the way things speed up a bit more.
Blackhorse Rd to Islington only has two stops in between so it was a very quick way to drink in a trendy place (well was back then). If I was going to Liverpool street it was one stop to Tottenham then onto the over ground for a straight through train to Liverpool street 30 mins tops. It really wasn't a nice place to live (just ugly rather than anything else) But given the choice of a house for 50k or a flat for 150k in zone 1 it was a no brainer. I never understood people that MUST live in XYZ postcode when most of London is under 10 miles wide.

[Sysman]

That misses the point - for most people it is not an investment, for them it is hanging on to their home when they retire and their income drops significantly.

I think we get a blinkered view on CUK, being contractors on good money, moving about, always looking at the bottom line. Most of the population are not like that.

You are right, of course. It is easy to forget what it used to be like before house prices and hence rents got so ridiculous.

Here's a taste of what could have been for me. And I lived in a spot like that at one point in my permie life. There are times when you say "sod the career opportunities" and look elsewhere.

[pjclarke]

Better than some dull village with people who are all related to each other. Towns are even worse

Is that your opinion, or one of the voices in your head?

[Doggy Styles]

Very true. Houses are an illiquid investment. If you want mobility and flexibility it can be better to rent.

But it depends where you are in the property boom/bust cycle. In the mid-nineties it was cheaper to buy than to rent in a couple of spots I worked in.

That misses the point - for most people it is not an investment, for them it is hanging on to their home when they retire and their income drops significantly.

I think we get a blinkered view on CUK, being contractors on good money, moving about, always looking at the bottom line. Most of the population are not like that.

If I am paying 1000 rent for 40 years instead of 1000+ mortgage for 25, when I retire I would still carry on paying 1000 rent instead of nothing.

That 1000 will be hard to find for the majority of the population, so what do they do? They will not have saved much, and it would be too late at their time of life to do much about it.

They can downsize, which is traumatic in itself for many at that age, but even the smallest rental properties cost several hundred unless they move away from their friends and family to a remote but cheap area, which can be a killer.

[Ignis Fatuus]

I've often wondered how this persists in Manhattan. Some of the world's most expensive real estate within half a mile of tenements.

Some of the world's most expensive real estate is tenements.

[MrMark]

I've often wondered how this persists in Manhattan. Some of the world's most expensive real estate within half a mile of tenements.

The New York analogy is quite apt.
A lot of European youngsters are quite prepared to work in London for low wages, as it's a good way to improve their English and gain a lot of experiences. Plenty of places outside zone 1 where they can rent a bedsit for £100 or so a week. Also many will do the PretaManger type job until they get an opening in their chosen career and then move on.

[d000hg]

There are plenty of fast trains into London from the outer zones. Surbiton is in zone 6 but you can get into Waterloo in 19 minutes.

Thanks!

whs
Newcomers to London have this strange notion that it's compulsory to take the tube to get anywhere. Quite often it's actually a poor option.

Yes that's exactly what I was assuming... London Travel == Tube.

[MrMark]

There are plenty of fast trains into London from the outer zones. Surbiton is in zone 6 but you can get into Waterloo in 19 minutes.

whs
Newcomers to London have this strange notion that it's compulsory to take the tube to get anywhere. Quite often it's actually a poor option.

[Bunk]

Really, that's interesting... I've not been often but it seemed even crossing zone1 took 20+ minutes!

There are plenty of fast trains into London from the outer zones. Surbiton is in zone 6 but you can get into Waterloo in 19 minutes.

[Sysman]

Oh please, can we do away with this naive view that rent is "money down the drain" but mortgage repayments are an investment?

View 1: both are money that you pay in order to get something that you want. Is it really what you want, and is the price OK for it?

View 2: rent is money down the drain. Mortgage interest is also money down the drain.
Pay 600 interest and 400 capital, sometime later you will own a house; or pay 600 rent and save 400, sometime later you will have a lot of money saved.
Which one is a better deal is a worthwhile question. What is not useful is to pretend that one of the options is not worth anything.

Very true. Houses are an illiquid investment. If you want mobility and flexibility it can be better to rent.

But it depends where you are in the property boom/bust cycle. In the mid-nineties it was cheaper to buy than to rent in a couple of spots I worked in.

[sasguru]

Hence the "pay 600 rent and save 400" option.

Whether that saving ends up being better or worse than paying down capital on a house is another question, the point is that to compare apples with apples, you must calculate on the renter saving the difference. If instead they spend it, that's the equivalent of the house-buyer extracting the paid-off capital every month.

But with the correspondences:
rent = mortgage interest;
saving = capital repaid
you could easily run up scenarios where either one or the other turned out better.

Nice in theory - in practice most people wouldn't save the £400, particularly if they were feckless renters
And with investment potential constrained for the next few years, your saved money wouldn't be doing anything at all.
Mortgages are a form of enforced saving for your old age, as OPs have observed.
And as we are all living longer, paying for your accomodation for just 25 years of your life sounds like a better deal.

[BrilloPad]

Back in the days of British Rail a lot of their staff lived in Peterborough and at stops in between there and Kings Cross. I assume they got free travel to get to work in the smoke as well.

That probably also explained why an allegedly non-stop train between Peterborough and Kings Cross would actually stop at some of the stations in between.

On our line there is an early train to take in rail staff. At our local station only underground staff got on. So the train was banned from stoping there!

[Sysman]

It used to be possible, and probably a lot of people living there have been there long enough to establish themselves. In the 90's you could fairly easily afford to buy a house, but then the prices rocketed. Now it's an impossibility. So probably a lot in their 40's and 50's (teachers nurses etc) doing fine, but not possible now. Flat share for ever or move away.

I had a couple of customers there in the 1980s. At a time when I'd got over the hurdle of buying my first house and could afford to go out whenever I pleased, have holidays abroad etc, many of my counterparts in London were either still flat sharing or married with both partners working and all of one partner's income going to service the mortgage.

I knew that I could have made a good long term investment by relocating and buying a house in London, but I really didn't want to go back to sitting at home eating beans on toast to survive for however long it took.

[Ignis Fatuus]

Rent isn't money down the drain, but...

The majority of people in the UK have little or no private pension provision. Even those who do will have a significant drop in earnings when they retire.

When buyers retire they will have paid off the capital on their house, and so their retirement living costs will be a lot lower than those who rent, who must continue finding the money to rent until they die.

Hence the "pay 600 rent and save 400" option.

Whether that saving ends up being better or worse than paying down capital on a house is another question, the point is that to compare apples with apples, you must calculate on the renter saving the difference. If instead they spend it, that's the equivalent of the house-buyer extracting the paid-off capital every month.

But with the correspondences:
rent = mortgage interest;
saving = capital repaid
you could easily run up scenarios where either one or the other turned out better.

[Doggy Styles]

Oh please, can we do away with this naive view that rent is "money down the drain" but mortgage repayments are an investment?

View 1: both are money that you pay in order to get something that you want. Is it really what you want, and is the price OK for it?

View 2: rent is money down the drain. Mortgage interest is also money down the drain.
Pay 600 interest and 400 capital, sometime later you will own a house; or pay 600 rent and save 400, sometime later you will have a lot of money saved.
Which one is a better deal is a worthwhile question. What is not useful is to pretend that one of the options is not worth anything.

Rent isn't money down the drain, but...

The majority of people in the UK have little or no private pension provision. Even those who do will have a significant drop in earnings when they retire.

When buyers retire they will have paid off the capital on their house, and so their retirement living costs will be a lot lower than those who rent, who must continue finding the money to rent until they die.