From: Jon S Green 
Newsgroups: uk.finance
Subject: Re: Renting the 'in' thing to do... read it in one of those free papers...
Date: Mon, 28 Jun 2004 18:43:19 +0100

m.cantaloupe@mailinator.com (m.cantaloupe) wrote:

> This Sunday I picked up a copy of one of those free papers in the
> London Underground. I forgot the exact name but it focuses on finance
> and savings advice for the rest of us, that kind of thing.
> 
> Well anyway what caught my attention was an article about how renting
> is actually quite a smart thing to do, from everything like TVs to
> microwaves and obviously, family houses.

Hmmm, seems to me they're conflating unrelated things here.

It may be worth renting a home, if you can take the hassles of agents'
inspections, rent deposits and so on.  The hope is that, whilst you're
paying the landlord's mortgage for them right now, you can wait for
house prices to settle, and for interest rates to start downwards again,
and save yourself a bundle against negative equity. unlike your hapless
landlord.

For white and brown goods, though, it's way cheaper to buy outright,
particularly if you buy second-hand from a reliable source.

> do you think it's
> better to rent or to buy in the current UK (London) climate?

Given that there are a lot of imponderables in the housing market at the
moment (will price rises slow, will prices plateau out, or will they
actually fall?; what's to happen with interest rates?; which areas will
continue to appreciate, and which will tank?), there's no clear answer
that I can see.

My advice (and I'm no better informed than anyone else) is: look at your
lifestyle.  Decide what's important to you.  

If investing in bricks and mortar, to give yourself a permanent (or
semi-permanent) residence that you own and can do with as you wish is
important to you, or if you don't like the loss of privacy that comes
with agent inspections, or living in someone else's house, perhaps you
should favour buying.  But try to avoid negative equity, if possible.
If you have a decent-sized deposit (say 20%), so that you can take lower
capital in a mortgage, that's good.  Personally, I wouldn't take a 95%+
mortgage in the present climate.

If, on the other hand, you are footloose and fancy-free, and want to
have the freedom to move somewhere else at a month's notice (contract
terms permitting), and/or don't want to be bothered with furnishing and
equipping your home, then renting's probably more your scene.

But don't, fercrissakes, look at it as an appreciating investment.
There are too many risk factors right now, IMHO, and the proof is this:
ask three "experts", and you'll get four opinions.  At least.  Without
an informed consensus on market conditions from people who should know
their subject, how can anyone else possibly second-guess the future?


Jon
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