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I'm fed up of having this argument in London. I rent, and pay about 2% of the value of the property in a year. I get around 8% on shares over the last ten year

I'm fed up of having this argument in London. I rent, and pay about 2% of the value of the property in a year. I get around 8% on shares over the last ten years. Renting is an absolute no-brainer for me. People are shocked when I tell them how much return I get on my savings vs how much my rent is, especially when I tell them where I live (a 'premium' part of London).

chrisseaton 9y ago
I don’t understand why you are arguing in favour of renting with those numbers. You pay more in rent than you would do for a mortgage, and you earn less from your shares than you would do from London property price rises... what’s the upside of renting in your case?
- nothrabannosir 9y ago
  I was under the impression London house prices rose very little last year? It turns out it was 2.5%; low compared to the rest of England. Surely the stress around Brexit is helping depress property value. https://data.london.gov.uk/housingmarket/ https://data.london.gov.uk/housingmarket/ If you could have made 8% instead: good work in 2017. Not commenting on the rest, but for a 1y data point, it was good.
  - zwischenzug 9y ago
    London is falling at around the rate of 1% per month right now. https://www.markiteconomics.com/Survey/PressRelease.mvc/5918dd96cb3c44419125e5ab1662edd7 https://www.markiteconomics.com/Survey/PressRelease.mvc/5918... as are rents (shares not doing great either), but that's another story.
- zwischenzug 9y ago
  In case it wasn't clear: 8% is per annum.
- stale2002 9y ago
  The upside is the 8% return on the stock market that he gets from that 100K that he DIDN'T have to put on the down payment t.
barrkel 9y ago
A mortgage payment is a lot lower than current market rent, however. (I bought a 4 bedroom house in London and we pay about £1200 per month mortgage on that, although we actually overpay to decrease the principal faster). Part of the reason I was able to buy, of course, was that I had saved a bunch of money, some of it invested in shares. Most people renting probably don't save as much as I habitually do, mind.
- nvarsj 9y ago
  > A mortgage payment is a lot lower than current market rent, however. How do you figure? Rents in London are substantially cheaper than a mortgage. In my current house, a mortgage with 10% down would be around 30% larger than the rent I'm paying. Unless you bought 5-10 years ago, but that's not really a fair comparison.
  - barrkel 9y ago
    I bought about 2 years ago. Sounds like we're in different areas of the city. I'm in Enfield.
    - nvarsj 9y ago
      Zone 3 for me. Prices are stupid high :).
crispyporkbites 9y ago
Your numbers don't add up. You live in a premium location, I guess a nice part of zone 2? So let's say 1mn GBP for a 3 bedroom house. You pay 20k/year in rent (2%) = 1666/month for a 1mn property? Then you're getting an incredible bargain. You can only get a 1 bedroom flat for about that in a good part of London. A 3 bedroom house would be closer to 3k/month, so really you're looking at 4-5%/year. So the difference in performance is only 2-3%, which would be offset by the gains you'd make in house prices from owning your own place.
- zwischenzug 9y ago
  Yes, exactly. Around 2% of purchase value. You'd be surprised what you can get renting, area depending.
  - crispyporkbites 9y ago
    That's not possible, you're not getting a place for 2% of purchase value on the open market. There are no £1mn properties available for £1,666/month, or £500,000 places for £833/month, it's more than double that everywhere in London
    - zwischenzug 9y ago
      I can't respond to this without revealing my personal information. A neighbour paid 900K for a house similar to ours, and we pay less than 1666/month.
      - zwischenzug 9y ago
        Here's an example (not mine): http://www.rightmove.co.uk/house-prices/SE21/Woodhall-Drive.html http://www.rightmove.co.uk/house-prices/SE21/Woodhall-Drive.... sold for 1.8m in 2014. At current prices that's around 2.5 mill. Asking rent is: 4k/month http://www.rightmove.co.uk/property-to-rent/property-72775817.html http://www.rightmove.co.uk/property-to-rent/property-7277581... suspect you'll get it for far less than that.

chrisseaton 9y ago

I don’t understand why you are arguing in favour of renting with those numbers. You pay more in rent than you would do for a mortgage, and you earn less from your shares than you would do from London property price rises... what’s the upside of renting in your case?

nothrabannosir 9y ago
I was under the impression London house prices rose very little last year? It turns out it was 2.5%; low compared to the rest of England. Surely the stress around Brexit is helping depress property value. https://data.london.gov.uk/housingmarket/ https://data.london.gov.uk/housingmarket/ If you could have made 8% instead: good work in 2017. Not commenting on the rest, but for a 1y data point, it was good.
- zwischenzug 9y ago
  London is falling at around the rate of 1% per month right now. https://www.markiteconomics.com/Survey/PressRelease.mvc/5918dd96cb3c44419125e5ab1662edd7 https://www.markiteconomics.com/Survey/PressRelease.mvc/5918... as are rents (shares not doing great either), but that's another story.
zwischenzug 9y ago
In case it wasn't clear: 8% is per annum.
stale2002 9y ago
The upside is the 8% return on the stock market that he gets from that 100K that he DIDN'T have to put on the down payment t.

barrkel 9y ago

A mortgage payment is a lot lower than current market rent, however. (I bought a 4 bedroom house in London and we pay about £1200 per month mortgage on that, although we actually overpay to decrease the principal faster). Part of the reason I was able to buy, of course, was that I had saved a bunch of money, some of it invested in shares. Most people renting probably don't save as much as I habitually do, mind.

nvarsj 9y ago
> A mortgage payment is a lot lower than current market rent, however. How do you figure? Rents in London are substantially cheaper than a mortgage. In my current house, a mortgage with 10% down would be around 30% larger than the rent I'm paying. Unless you bought 5-10 years ago, but that's not really a fair comparison.
- barrkel 9y ago
  I bought about 2 years ago. Sounds like we're in different areas of the city. I'm in Enfield.
  - nvarsj 9y ago
    Zone 3 for me. Prices are stupid high :).

crispyporkbites 9y ago

Your numbers don't add up. You live in a premium location, I guess a nice part of zone 2? So let's say 1mn GBP for a 3 bedroom house. You pay 20k/year in rent (2%) = 1666/month for a 1mn property? Then you're getting an incredible bargain. You can only get a 1 bedroom flat for about that in a good part of London. A 3 bedroom house would be closer to 3k/month, so really you're looking at 4-5%/year. So the difference in performance is only 2-3%, which would be offset by the gains you'd make in house prices from owning your own place.

zwischenzug 9y ago
Yes, exactly. Around 2% of purchase value. You'd be surprised what you can get renting, area depending.
- crispyporkbites 9y ago
  That's not possible, you're not getting a place for 2% of purchase value on the open market. There are no £1mn properties available for £1,666/month, or £500,000 places for £833/month, it's more than double that everywhere in London
  - zwischenzug 9y ago
    I can't respond to this without revealing my personal information. A neighbour paid 900K for a house similar to ours, and we pay less than 1666/month.
    - zwischenzug 9y ago
      Here's an example (not mine): http://www.rightmove.co.uk/house-prices/SE21/Woodhall-Drive.html http://www.rightmove.co.uk/house-prices/SE21/Woodhall-Drive.... sold for 1.8m in 2014. At current prices that's around 2.5 mill. Asking rent is: 4k/month http://www.rightmove.co.uk/property-to-rent/property-72775817.html http://www.rightmove.co.uk/property-to-rent/property-7277581... suspect you'll get it for far less than that.