The Property Ladder

[jambutty]

Subtitle – Rent or Buy.

The government, the banks, the mortgage lenders and even parents all advocate that their off spring should get a foot on the first rung of the Property Ladder.

But should they?

Well, before people make up their minds just ask yourself why there is such pressure? Could it be a self-interest pressure? Are these young adults being pushed into buying a house that they cannot really afford just so that someone can sell them theirs and buy a better home for themselves?

If people want to buy a house then that is their affair but in this day and age where job security is well down on the list of an employer’s priority it may not be the smartest move.

I know of many couples who have not only lost their homes but also lost the money that they put into them because their circumstances changed for the worse through no fault of their own.

Maybe young couples should rent a home from the local authority or one of the many housing associations for the first few years?

The advantages of renting are enormous.
The average rent will be somewhere around an average mortgage.
You have no building repair bills unless the reason for the repair is your negligence or a deliberate act on your part.
You do not have a mortgage and thus no need to insure the building.
Improvements are paid for by the landlord as are repairs unless the reason for the repair is a tenant’s act.
Before moving in the landlord will either redecorate the premises or hand over vouchers for materials to enable you to re-decorate the house yourself. With judicious paper and paint selection the whole house could be decorated for free.
The payment of rent is one week in advance.
Should your circumstances change for the worse all or part of the rent and Council Tax is paid for you by the local authority from government funds.
If your home becomes overcrowded your landlord must re-house you into more suitable property.
If your home is destroyed or becomes uninhabitable the landlord must re-house you.
You have a ‘right to buy’ after a few years at a very favourable rate.

Renting from a private landlord is not the best idea.
You will be charged a month’s rent in advance and also need to deposit a bond of around £500 or even more.
There is no ‘right to buy’ scheme.
Should your circumstances change for the worse, you will only get part of your rent paid, as private rented accommodation is at least 20% more than local authority.
It can be difficult to get your landlord to effect repairs.

The disadvantages are that you pay rent each week and will never own your home, but then there is the ‘right to buy scheme’ so it’s not such a big disadvantage.
As a tenant you must keep the interior of the house in good working order and also keep a tidy garden. But then it would be in your own best interests to do the same if your owned the house.
You must adhere to the tenancy agreement but that is no hardship for the majority.
In short there are no real disadvantages in renting from the local authority or housing association.

Edited to change the $ to £.

[entwisi]

these right to buy schemes count every penny that you pay in rent off the value of the property then JB? I don't think so in which case you are paying out dead money. yes you are protected against repairs(but then we hear all teh time about what a pain teh rear Hyndburn Homes are) etc but as investments markets have shown, apart from a few minor blips caused by over eager consumers the price of property rises steadily. hence not only is it your home it is also an investment.

When you look to buying a property you should always consider how much you can afford. And by that I don't mean how much teh bank will lend you. Sit down and write out a proper budget. Food, Clothes, bills, beer money, transport, consider EVERYTHING that you spend in a month excluding your actual rent. Then you will have an idea how much you have left. Don't use all this, aim for 90% at absolute max and put the rest in some form of savings to see you through a rough patch. Ideally if you can get 2 years worth of mortgage payments in a savings account then even if you lose your job you know you will have a roof over your head till you find another. that job itself may not be what you want to do but you can always look for something better whilst earning enough to put food on the table. I am lucky to have a cushy, well paid job, if I lost it tomorrow I would be happy to go cleaning toilets if it meant we could put food on the table. Another cushy IT job will be along shortly.

Rent or buy, no brainer IMHO!

[Madhatter]

I feel like I'm wasting my time and money here tbh, but at the moment I can't afford to buy. I've got no debts at all though so there's hope in the future.

[Busman747]

Nice one jambutty, I thought- - -

Good topic, nicely thought out and written UNTIL - - You said: You will be charged a month’s rent in advance and also need to deposit a bond of around $500 or even more.

Europeans tend to rent, Brits tend to buy (that is when they can!) but WHY are you taking info from what is probably an American author to talk about what us Brits should do?

[jambutty]

these right to buy schemes count every penny that you pay in rent off the value of the property then JB?

No they don’t entwisi but unless they have changed the rules on ‘right to buy’ you had a ‘right to buy’ after being a tenant for 5 years and there was a reduction on the current market value of your rented home for each year of your tenancy. Thus someone who had rented for 15 years or so the price was about half the market value.

5 years ago when I was on my own in a 3 bedrooms house I could have bought it for around £16,000. The market value was at £30,000 or thereabouts.

When you look to buying a property you should always consider how much you can afford.

You are talking about a sensible approach to budgeting. Even with the best laid plans things can go awry through no fault of your own.

It’s all very well saying that people should save for the rainy day but try telling that to someone on the minimum wage and there are more of those than there are on good wages.

The first six months of this year saw the highest number of mortgaged domestic property repossessions and also official bankruptcies ever.

Good topic, nicely thought out and written UNTIL - - You said: You will be charged a month’s rent in advance and also need to deposit a bond of around $500 or even more.

I’m not sure what you are trying to say there but that is an average charge. Recently my eldest daughter and my son both made enquiries about renting from a private landlord. All wanted one month’s rent in advance and the bond ranged from £350 to £1,000. Prior to that my eldest granddaughter and boy friend not wanting to live with her mother sought rented accommodation. They required one month rent in advance and £400 bond. I gave her the £400 and loaned her the advance rent. I must get it back one day.

I don’t know what gave you the idea that I am taking information from a probable American author Busman747, I just happen to think as I wrote. I knew nothing of someone else’s opinion on this issue.

But it’s each to their own view on the issue and I happen to think that in the current climate first time buyers should think twice, may three times, before committing themselves and should consider renting from the local authority or housing association for the first few years.

Edited to change the $ to £.

[shillelagh]

But it’s each to their own view on the issue and I happen to think that in the current climate first time buyers should think twice, may three times, before committing themselves and should consider renting from the local authority or housing association for the first few years.[/quote]

The problem with that jb is the right to buy scheme! The councils arent replacing the houses that theyve sold to tenants so there are not as many houses for them to rent out to people. Where I live on a council estate there are 7 council houses out of 18 on the avenue. Everybody else has bought them. Same elsewhere on the estate.

Some of the houses are going up for sale now. Up for sale for over £100,000 each. I know how much I paid for mine and i paid nothing like that even on the council evaluation!

Many years ago I put my name down on the council list for a flat even though I lived with my mum I wanted to set up on my own. 3 years later I was offered a flat. I went to look at it and said no i didnt want it and was told if i didnt take it then my name would go back on the list at the bottom as i'd refused it. I wasnt offered another one at all.

[Madhatter]

Many councils have altered the right to buy, depending on how much of a shortage of housing stock there is in the area, and some have capped the discount at a lower amount than the 60% maximum that it used to be.

[lettie]

Originally Posted by jambutty

I don’t know what gave you the idea that I am taking information from a probable American author Busman747, I just happen to think as I wrote. I knew nothing of someone else’s opinion on this issue.

.

I think that Busman is probably thinking American author because you are using dollar signs rather than pound signs. To be honest, I thought the same thing.

[entwisi]

yep, same here, $ = USA, £ = UK

[Neil]

Maybe he presses teh wrong keys sometimes Ian

[Busman747]

Originally Posted by Neil

Maybe he presses teh wrong keys sometimes Ian

I can go along with that

[harwood red]

the right to buy is a govt scheme and local authorities and housing assoc's cannot pull out of it regardless of how few properties they may have left...unfortunately!!

It has recently changed for tenants at twin valley as in, if you were a tenant when the stock was transferred then you keep your preserved right to buy and the discounts that go with it.

If you became a tenant after the transfer then you only have the right to acquire which is a fixed discount regardless of how long you live in the property.

The demand for HA properties (scuse the pun) has gone through the roof with so many first time buyers being priced out of the property market so waiting time to get a property has lengthened considerably.

One final poing to Jam butty, overcrowding is no longer a reason for urgent rehousing in the Blackburn with Darwen area!

[jambutty]

Many Councils have gone and are going down the “selling most of their council stock to a housing association” road shillelagh even if it means forming a new association, like Blackburn did with Twin Valley Homes.

However TVH are building new properties for rent. But the problem of waiting lists still remains although today, as far as TVH is concerned, it appears to be much fairer and you get three bites at the cherry before you go back to the bottom.

Well I’ll be hornswaggled – I HAVE used the dollar sign haven’t I. But I did use the pound sign once. Come on! That has to be worth something? Can I plead insanity, old age, carelessness? I’ve put it right now. Much obliged for pointing it out lettie.

I do press the right keys Neil but not as Eric or was it Ernie who stated, “not in the right order”. I’m not a typist in the true sense of the word. In fact I’m not a typist in any sense of the word. I get by and Word helps a lot.

I wasn’t aware that overcrowding is no longer a reason to be re-housed harwood_red. Maybe it is selective? Nor was I aware of the terms for the ‘right to buy’ for new TVH tenants. That does put a slightly different slant on the topic.

[harwood red]

As you have probably gathered jambutty I work for TVH and the rule of 3 bites at the cherry then back to the bottom no longer exists. You can apply for as many properties you are interested in but also have the right to refuse if when viewing it is not suitable and no you don't then go back to the bottom, you keep your waiting time!

the transfer of housing stock from councils to HA's has happened due to the new legislation that states that all homes have to be upto a certain standard by 2010, unfortunately many councils do not have the funding to get their homes up to standard by then as they cannot apply for external funding or loan facilities like HA's can.

Any cases of overcrowding are looked at but by the housing needs section at the council which is still separate from twin valley. It is only in extreme and I mean extreme circumstances that overcrowding would be classed as a priority for a move

[jambutty]

There is nothing quite like getting the ‘up to date’ facts straight from the horse mouth so to speak. Not that for one moment am I suggesting that you are a horse harwood_red.

I suppose that the new system is better overall.