Renting Is Dead Money

Absolutely, money spent on rent is deader than the era when Charlie Sheen and chewing bubble gum was cool. I know a lot of people will disagree, but that’s because they’re renting.

Granted, for some people renting is the only option, and in the following circumstances I think renting is a sensible move:

• you have a family, you need your own house, but you can’t afford to buy
• you find it unbearable living with your parents. And I don’t mean teeny-boppy bullshit like “my mum won’t let play out after 8pm”, I mean issues like, “my mum beats me with a toothpick for joy”
• you’re a student attending a University far away from home
• you don’t want the responsibility of a mortgage nor do you want to stick around in the same place for longer than one minute. I get it, I understand; I’m hip, i’m cool.
• Asylum seekers, refugees, or anyone else sneaking into the country; you have no place to stay and you certainly don’t have enough money to buy.
• you have no money nor a job; you’re living off social benefit cheques

For anyone else, you have no excuses, especially the youth of today…

A lot of my friends rent because they can’t afford to buy and they want the privilege of having their own independence, whether that be for some form of life experience or to get away from their parents (it’s usually the latter). And I think that’s crazy. I understand that eventually everyone wants to break free from the nest and live independently- but there’s a smart way to do it, and patience is important. Thinking about short-term pleasantries can often hinder the long-term joys in life. The early years of life is about building a foundation for your future, so you can eventually do what the fuck you want. I still hear my friends (aged between 20-25) talking about moving out and renting together. It’s weird, because a move like that appears immature and irrational to me, even though it’s probably not. I guess I’m biased.

Unless you have a well paid job, it’s extremely difficult to get onto the property ladder once you start renting, because the majority of your salary usually goes on rent and living expenses. The average salary in the UK is approximately 23k BEFORE tax. After tax, you don’t have enough to pay rent, pay bills, live life and save for a mortgage.

Believe me, renting with your best friends Tom, Dick and Harry maybe boyishly cute when you’re 20, but it can be extremely unappealing to the opposite sex when you hit 28. Unfortunately we don’t have the ability to slowdown time; 28 will come around tomorrow. Take my words with a pinch of salt at your own risk, but let me assure you, if I wasn’t blogging about property, i’d be blogging about women, men, sex and relationships, because i’m good at that shit.

If you can avoid renting, do it. I say suck it up and take advantage of your parents roof. Who cares if you’re living with your parents until you’re 30? With the current condition of the property market, the majority of us will be living with our parents at that age anyways. Live with your parents until you can afford to buy. Rest assured, a 30yr old renting isn’t as appealing as a 30yr old with stability.

The benefits of buying a house

• you slowly build equity over time- it’s not money down the drain
• statistics show that property doubles in value over 10years
• owning a home provides a physiological sense of stability, adulthood and independence
• it’s easier to get loans because you have collateral
• once you buy a house, it’s easier to gradually upgrade to bigger and/or more expensive homes
• let’s face it, it’s appealing to the opposite sex

Housing crash is coming, we can’t buy

Fuck the housing crash, Fonzy. The housing crash isn’t even a certainty, and to be honest, most of the frenzy stems from the media and a few of the weird people seeking habitation on HPC. In worst case scenario, the housing crash will affect short-term investors, not first-time buyers looking to get onto the property ladder. Moreover, put it this way, if you buy a house for £100k, and the property market takes a 20% hit from a crash, the house will be worth £80k. That £20k loss would have been inevitable after approximately 3 years of renting anyways.

£500pcm rent.
£500 x 12 (months) = £6k yearly spent on rent
£6k x 3 (years) = £18k

Don’t get me wrong, I understand when people sell property investments because of predicted turbulence, but I don’t understand those people that are selling their “homes” to rent, because surely could end up costing more.

My Conclusion

• there’s no shame in living with your parents until you’re 30 for the sake of being able to save up enough to get a mortgage. Most people are in that situation these days anyways.
• don’t move out of your parents for the sake of it. Living with your friends may seem cool now, but before you know it you’ll be 50yrs old and still living with your friends.
• renting will cost you in the long run; once you start renting, it’s extremely difficult to save for a mortgage
• if you can afford to buy, then buy over renting. In the long run, it’s way more beneficial as already stated

What do you guys think? Is renting dead money?

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V wrote, on Jan 1st, 1970

Here’s when renting starts getting clever and buying starts getting stupid; when the interest you’d pay on your mortgage (given what you currently have in your pocket to use as deposit) exceeds the rent you would have to pay to live somewhere acceptable. Mortgage interest charges are also dead money; don’t give it to the bank. Rent, and put the excess in your pocket. Then, when you have enough in your pocket to break those interest fees even, buy. I think you might find that’s what all those stupid people are already doing. V

The Property Amateur wrote, on Jan 1st, 1970

I think if you find yourself in a situation where interest is greater than rent- you’re buying an unsuitable property. Rule #1 of buying is “buy the right property”. It’s a no-brainer, but a lot of people do buy the wrong property and get into the situation you just described. But then again, if rent is £600 and interest is £700. Would you rent or buy, assuming you could afford the interest? Saving £100 a month- you’d only be saving £1200 per year. You’d probably make more than that with house price increases. I think a lot of people have been in this situation and decided to rent. In the mean time, house prices kept increasing, and eventually so did rent because people can’t afford to buy. I think a lot of people lost out by waiting for so long.

bsb wrote, on Jan 1st, 1970

	Luckily at the moment house prices are falling rather than rising.

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