Banker Explains: Should You Buy or Rent in 2023?
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- Опубліковано 22 тра 2024
- Deciding whether to rent or buy a house is a significant financial decision that depends on individual circumstances, preferences, and market conditions. Renting offers flexibility, lower upfront costs, and fewer maintenance responsibilities, making it an ideal choice for those with an uncertain future or limited savings. On the other hand, buying a house can be a long-term investment with potential appreciation, tax benefits, and the ability to build equity. Factors to consider include financial stability, location, duration of stay, and personal goals. Ultimately, choosing between renting and buying a house should be based on an individual's financial situation, lifestyle preferences, and long-term plans.
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Timestamps
00:00 Intro
00:31 Buying a House: Example
02:16 Buying & Mortgage Costs Over Time
03:06 Rental Costs Over Time
04:18 Rent VS Buy: 25 Year Costs Explained & Explored
06:38 Factors To Consider When Renting VS Buying
08:54 Summary
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The only part which doesn't get mentioned enough is that the renter can take that £25K which went towards the buyer's deposit and put that into the stock market to ride for the 25 years as well as investing monthly for those 25 years. I prefer buying but it's not entirely accurate to pretend that a renter can't also be growing their net worth during that same period
Couldn't agree more. This analysis is not complete - I would welcome a video with the scenario of the renter investing the money. Also, if buyer buys a flat service charge + ground rent costs also applies which in cities like London could easily exceed £2k / year - service charge also increases with inflation.
Totally agree
This assumes the renter has the money in the first place to put into the stock market.
@@MattBrighton If he has the money for the deposit + fees, why could (s)he not use the same money to invest?
@@MattBrighton but if this is rent vs buy isn't it about which one is the best choice if you have the deposit money to either rent or buy?
Thank you for making so many things clear for me x
I think there's a couple of things you missed out here; after you've paid your mortgage, you own it. After 25 years of rent, you own nothing. This means two things; 1) your property will continue to appreciate for however long you live. 2) if you rent, there's just more rent to pay.
This is very true :)
U also continue to pay more property taxes and insurance each year as the house appreciates, along with 1 percent maintenance fees a year the renter is flexible no liability and has the ability to move freely.
Maintenance is no way 5K a year, maintenence will be built into the rent so don't think you're not paying for it. £1169 month will seem like £1000/mth in a couple of years and seem like £500/mth in 10 years while your rent keeps going up. Landlord won't be interested in changing your kitchen if you fancy something newer or to your taste.
Thanks for this video brother. Great information ☺️...
You’re so knowledgeable, thanks 😊
Nice timing!
If I have the opportunity, I plan buying in 2024. Thanks for the advice 🙌
I really appreciate the comparisons. Although:
You missed the opportunity cost of the downpayment.
On the other side, you missed the lower interest rates you will receive every time you remortgage with a higher LTV.
Both would complicate things too much for a 10 minute video.
Great video, but I think there's room for more nuance. Individual circumstances matter, and it's important to consider fluctuating interest rates, the risk of no capital appreciation, and non-financial factors like emotional attachment. Also, more data or stats would be helpful to support the claims. Keep up the good work! 👍
Biggest thing you have missed out is the security of owning your own home. You'll never be turfed out providing you meet mortgage payments. Renting however you can be asked to leave, rental market is furiously competitive - a third of rental properties gone in 4 years. It's not a nice place to be and owning your own home is much better.
A difficult comparison, one thing I did with my own house was to refinance and I bought a commercial property which pays the mortgage and some. You can't do that if you rent.
With buying also mortgage insurance, home insurance, property tax.. And lifestyle inflation no one says waste of money but is when you own that grows as equity builds compared to renting.
If you are going to live in the same house for say 10 years or more it is always better to buy. Even the 2008 crash recovered values. Its when you need to move regularly that you are subject to market dips.
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The flaw I see in this is the assumption that rent cost is same as mortgage cost.
I would love to buy a £250k place in Glasgow but that same place is rented for £800 and not £1100 how much my mortgage would be.
Did you count opportunity cost of the deposit? And did you balance the property value against inflation? Meaning, the ~150k gain isn’t really 150k after 25 years. AND, the big one, you have a liability, not an asset
The transaction costs with buying for the average person are likely to be higher. Not applicable here but stamp duty for >250k + additional legal fees. These costs are not unsubstantial especially if you intend to sell in say
Not having to pay rent when retired is a huge factor.
Renter can enjoying living in many different neighbourhoods giving them variety and pleasure
Analysis is not full. Interest rate fluctuations. Look at current situation. Rent is 500 pounds less than mortgage for a 3 bed house as house prices are at peak. 5 percent rule applies to decide rent or buy.
You didn't mentioned investing deposit money and investing money saved if rent is less than mortgage.
It's an opinion, I might be wrong.
We're first time buyers and our first interest payment was £140, capital was £360
Rent = 1 huge monthly bill for the rest of your life! Mortgage = 1 huge bill for just 25 years or less. No brainer .
More like 35 years. Also rent = no maintenance cost. Buy = might need a new roof etc.
@Robert R Jones lol, 35 years, if it takes you that long you're doing something seriously wrong, the mortgage payments become nothing over time due to inflation and eventually 0, rent will always go up, 800 -1k today 2k+pm in the future good luck to anyone facing that in retirement. Just had a roof done 4 years ago with upvc gutters etc for around 8k, won't need doing again and got the house for bmv due to required works so added value. Purchase cost 140k, full refurb Inc gardens around 90k yes it was a big job but just revalued at 310k-330k. It ain't easy, but no Mortgage now due renovating and making on each move over the years over paying etc etc. Mortgage everytime but some will never listen so 🤷 , they can always rent my next btl👍
@@GM-kt8rh Totally agree with you. Long term renting is a total mugs game. Now short term renting, to ease the stress of selling a house, and then buying a new one without having to sell/buy at the same time can be a good idea. But renting for life? Thanks, but NO thanks!
I live in London because of my job but can't to afford to buy here. Do you think it's a good idea to buy to let somewhere, like the small town where I grew up in the east midlands? Does this make more sense? I would be a first time buyer.
Absolutely makes sense 👍
2 key points were missed out here. One key point missed was the opportunity cost of the £30k deposit/sdlt/fees. If you pull even a 10% return over 25 years, you will be up to £325k. 2nd key point, renovation. Houses needs to be renovated every 10 years in order to hold market value, otherwise you can minus 10-20% of the price after 25 years depending how much TLC they will need.
1. point yes, second no, there was a maintenance cost added, which is renovation.
10% yeild every year for 25 years. As if only it was that easy my friend. Negetive return on a row can compound you backward.
All true and too much to cover in a 10 min vid
This is bolocks you won't get 10% and nobody with 30k cash saved is considering renting
@@ThatGuyWierd only a rough landlord moved me away from renting, not everyone so sure to stay here for long enough for buying.
It is and will always be better to buy.
£416 a month, every month for the duration of ownership? Seems very unrealistic. Are you suggesting an annual rewire and biannual boiler replacement? Seems odd.
Service fees alone are approx 4500 a year.
@Alexandra Ost almost 80% of people live in freehold houses in the UK. They do not pay such fees. I understand that some do. But in this instance, to make it out like the average person is to budget 2% of the value of their home as maintaine and wear and tear on an annual basis is unrealistic and skews the equations. I own and have done for 13, i have lived in 3 properties over that time and I am yet to spend £5000 in maintenance.
@@heshamthearab Are you telling me that you don't replace your roof every year?!
@@alexandraost9331 That's a leasehold. Most property in the UK, apart from flats, are freehold. And leasehold is a form of rent as you will ALWAYS be paying service charges even when the mortgage is paid, plus you never actually own the land. Which is why leasehold is second only to renting as being a REALLY bad choice in terms of keeping a roof over your head.
@@bobjames6622 I am aware. Not many freehold options in London though.
Hi Matt, I've been living in Asia for the last 20 years, and I'm planning to return to the UK. Should I buy or rent if I have enough cash to buy? Cheers!
Mate UK is at its all time high in living cost. If your circumstances allow I would advise you to steer away from UK for now..
@@11Elevon UK living cost is dirt cheap compared to Hong Kong. Take an essential item like milk. Even though it has gone up 50% in the UK in the past year it's still half the price of Hong Kong. On Tesco online it's about 1 pound 50p per litre. Here in HK it's 3 quid a litre. Petrol = 100 quid a tank in the UK. HK = 140 quid a tank. I'll take UK anyday over this hell.
There is one major factor that we don't seem to keep in mind.... politics, if/when Labour is in charge, there will be 100's of thousands of additional new builds popping up across the country, essentially stabilising the housing market and more rental regulations.
@esemceX ignoring the reality of numbers rarely works out well
Dream on, pal!
Labour isn't even in yet and there's already been a rental reform bill has some beneficial changes for renters
It is better to invest now," You will never be younger than you are today and there will never be a perfect time to invest. Due to compounding, which Einstein called the 8th wonder of the world, you can get rich slowly from investing if you do it from a young enough age.
You’ll have made far more than £180k buying…….£416 a month in maintenance costs is absolutely ridiculous ! I thought you were more switched on than this.
Really? A banker doesn't even mention the opportunity cost of capital?
I have 4 buy to let properties, the income covers my rent. I live rent free ! Now just take a minute to think that through …. 🤔 😂
In theory this is fantastic but people always sell the most idealistic view point, if one or more of your properties become empty for a prolonged period you have to cover the bills on it. If one or more tenant decides to stop paying the rent you have to cover the bills on it. I’m sure you get my point at this point.
@@ItsMe-co4bj oh dear ! Is my glass half full or half empty ??? Mine is half full and I can see your point … yours is half empty 🤦♂️
If one of my properties is empty for a period of time then the others pay for the empty one or I could take out an insurance to cover voids if I was that worried about it, which I’m not.
If a tenant stops paying, I’m not responsible for the bills, they are for the time that they reside at that address.
Lots of landlords are selling due to interest rate rise. Unless you fixed for 5 years just before the rise. Some losing money barely breaking even.
My mother in law done that’s one of her houses is falling apart and had to get rid of the tenant because the house is not safe and another tenant is leaving on of her other properties 😂