bandrui

I would be interested to know what they have included in 'typical costs' for the homeowners. Does that include maintenance or just the usual mortgage, tax and utilities?

As someone who was always firmly in favour of buying, I have changed my mind. I am frankly sick of maintaining my house and property. As well as my usual work, I spend hours on fixing fences, painting, sanding and staining decks, de-mossing the roof, etc. etc. There's little time for life. More than that, what once seemed to offer some stability and security, now seems like an anchor around my neck. I am looking for more mobility, freedom and enjoyment in this latter phase of my life (which I hope will last a long time!).

I notice that there are a lot of people in my age group who are having the same idea here on the island... selling and downsizing to get more enjoyment out of life, and given that we are a large demographic, this likely impacts the housing market.

I like the idea of moving if I want to live in a different area, which is a lot easier to do if you don't have a house to sell, as many of us are finding out.

Pistolpete2

This is the actual article, which explains the basis for arriving at buying costs.

http://www.lloydsbankinggroup.com/me...ng_Renting.pdf

Of course the article is only talking about money spent and not the fact that buying involves (hopefully) building equity and potential for capital gain (or loss right now) depending upon your Location Location Location decision.

It's funny that in the Sky article the fact that property prices are rising makes the buy decision less attractive now than before in terms of cash spend, though as buyers we would pretty obviously want sustainable price rises after we buy, one would think.

The comparisons are also made for the first year of buying* and since the next direction for mortgage interest is quite possibly UP, in spite of banks coming up with better (cheaper) mortgage products right now, one has to consider the mortgage lifetime, for cash flow purposes, when making that buy decision.

No consideration seems to be given to the interest one forgoes by finding a deposit or even where that deposit came from (thin air?) or the cost of stamp duty and legal fees going in.

*The first year can often offer teaser discounted rates.

Pistolpete2

Hi bandrui!

Remember that tax (council tax) and utilities will be for both buyer and renter accounts.

'Average buying costs:
Average buying costs include mortgage payments (weighted average of repayment and interest only mortgage payments), household maintenance, repair, minor alterations and insurance costs. Mortgage payments refer to the average new borrower (including both first time buyers and homemovers).
Figures relate to the first year of purchase and are for 3 bedroom houses.
UK figures are a weighted average of the regional owner occupied tenure data
, based on Halifax estimates

Rental payments:
Average rental payments are based on rental data from Birmingham Midshires. UK figures are a weighted average of the regional private rental tenure data. Weights have been calculated using regional housing tenure data from the CLG.
Rental payments refer to the average for a three bedroom house over 12 months to June'


I too have your sentiments regarding property upkeep and our property here in St Lucia will definitely need somebody other than me to keep it up while we are in the UK from next year and if/when we ever return here from time to time or whatever - I just can't imagine we would ever find a buyer if we wanted one.

At the same time, anything in the UK will have zero exterior maintenance, though we are absolutely looking to rent for at least two years, if only for flexibility.

I like the idea of fully furnished lettings initially and in typical vacation-type areas in the West Country, for example, this is feasible for property let on a weekly basis in season that is let from October to March on a monthly basis on a six-month lease. Landlords (some) also offer this as an alternative on regular properties. This gives time for proper scouting of an area prior to the big decision and also buys time where supply is not as desired but does cause some problems if there are sizable personal effects to be considered.

dunroving

Anecdotally, I have experience of buying vs. renting costs for two properties in the past 10 years.

I bought a buy-to-let in 2004, in a vain attempt to invest responsibly for my retirement. Despite the mortgage being interest-only, for less than 70% of the house value, the costs of being the owner far outstripped the rental costs to the tenants over the past 10 years. Besides the regular payments of mortgage, insurance, gas boiler maintenance contract and rental agent's fees, the cost of constant repairs ramped up the expenses far above the rental income. I'm pretty efficient at recording all costs and income, so within a few pounds here or there, I can say the following:

I recently sold it for a net loss of over £30k.

My own residence is a slightly different story. Purchased in early 2007, on a repayment mortgage, at a low interest rate (thank goodness). Only £100 or so per month goes on interest payments. Repairs and maintenance have added up to a little over £18k, which over 6.5 years averages out to £235 per month. Those costs have not added to the value of the house, in fact it is worth about £15k less than when I bought it - so, another £193 per month. Overall, then, it has cost me around £528 per month to be a homeowner. That doesn't include the actual cost of purchasing the house (mortgage arrangement fees, estate agent fees, etc.). Overall, it probably comes out equal to what it would cost to rent. In the current mortgage market, I'd be paying another couple of hundred per month in interest, easily.

As mentioned, if you may only stay in a house for the relatively short-term, the one-off costs associated with buying and selling probably make it cheaper and less stressful to rent.

Perth

I'm with you on not owning again. We live in a sinkhole prone area of Florida, and we have seen 2 open up in the last year on our street. Every week when the OH mows the lawn he checks the foundation for cracks. We will not own when back in the UK, even if it means paying out more monthly.

Take a look at this couple. If you are independently wealthy (I think they budget $7,000US a month) this would be the way to go!
http://homefreeadventures.com/

bandrui

That's the ticket! Though my travels would be a slightly scaled down version ($7,000! ), and would not plan out the entire year, but leave it a bit more open-ended. Nevertheless, great blog. Thanks for the link .

Celticspirit

I totally intend to rent. I have never rented in my life before and it's a huge mindset change for me. I will be 70 in January and why would I want to maintain a home again? I also live in an area here outside Dallas where fracking is within 5 miles of our home.......3 minor earthquakes in the past 18 months. We got our "coming soon" sign up today.......it's been a long and painful journey.
However I am coming with three little dogs....none over 5lbs. My brother tells me that could be a huge issue in finding a suitable property. Although the UK ADORES animals......leasing with them is not so pet friendly at least in Northern Ireland. I must leave and purchase a car before my 70th birthday as I understand the insurance companies require a driver's test after 70 if I am on an international license. I need that year to be a competent driver on the wrong side of the road ;-). I have a perfect driver 's history record here.

cheers

See I'm a little dense, so what does this mean?

scot47

The mortgage system is nothing more than a vast Ponzi scheme

TheEmperorIsNaked

Yes it is.

Perth

I haven't rented since college days, but will be glad to give up the responsibility of home maintenance. I am a little worried about stability, and having to move if an owner wants to sell or happens to be an expat returning home

You have a lot on your plate, but I am glad to see that at least you are moving forward

scot47

Getting a secure tenancy from a Housing Association was the best move I ever made ! No more mortgages for me !

not2old

its all a numbers game.The beginning age, how long you are planning to live & how much money.

An example on the couple in the link who are aged 67 & 72 when they started, sold their home sold off their respective entrepreneur business that they had, they likely had a considerable amount of money.

News article gives a few more details

http://internationalliving.com/2013/...t-on-the-road/

Suppose for us not so rich folks we had a cool million currency of choice (divide by or mulitples of 10) invested with a net after tax return of 2% with a 50,000 (£, €, $'s) draw down of the remaining capital each year - the money would run out after 25 years.This is similar to an annuity only its one you do yourself in an investment product of your choice. Depending on the amount as well as the tax implication I used 2% net return as a conservative number

So by doing it at age 50, by age 75 the money is zero That's the simple 25 year run out for the money game.

You could also factor in other income from investments, personal pension,TFSA, RRSP, Old age security income, CPP, Roth/IRA/401K.

How much are the couple spending being world travelers - who knows.. I'll guess not less than 5000/mth but likely upward to 10,000/mth.

I suppose having a fixed base & continually traveling you'd need to rent if one wasn't tying up capital in a house or condo.

In our situation at age 66 knowing the older we get the more difficult it would be forever traveling, that by 75 forever traveling on planes to far off places would get more difficult.

Therefore, along the lines of the couple in the link doing a modest here, there & everywhere - using one of the of our children's as an address for residency/tax purposes (no not living with them) just as a point address, we'd likely need a constant income stream of not less than 5000/mth (60k/year). Others may need mor or less than us/

To each their own way of doing it, and if you are not too concerned about leaving an inheritance to your loved ones, do the numbers that work best for you - plan for the money to run out by age 85 or 90 is my suggestion.

cheers

N2o.
Being on the road and traveling would get old after awhile.
There are people who live on a ship maybe for tax reasons and they like seeing different places but that doesn't appeal to me.
Your required or suggested income is high for most of us but if you live in Toronto I can understand why you come up high.
The less you need I think you would live longer.
I'm thinking at least $2000 per month would do it??

not2old

I'd argue to death with you on the 'all in' real living costs doing it as a world traveler couple, again depending as I said on individual circumstances, needs wants & what you dream is doable .

If someone was forever traveling moving every three months - it will be expensive & for sure you'd get worn out real quick.

If they were long leasing furnished apartment (six months at a time) & keep on doing it moving from place to place in Europe, North America or OZ/NZ it will be likely be less than travelling ocean liners or living from hotel to hotel in every place.

If folks were forever in transit & budgeted $1000/mth for long term (6 month) accommodation, add to that utilities, phone, internet etc, groceries, eating out then the flights traveling around ... $2000/mth wont go too far

The other part of that is how long in years do folks continue to travel & do go back to the same places?

At present in Toronto (updated numbers) our property tax is approx 33% of our (frugal lifestyle) monthly expenses. Utilities (hydro, gas, water, phone, cable, internet) flat across 12 months is running us 25%. The rest is spread across auto, fuel, insurances, grocery & misc. Like the couple in the link, the bulk of our assets is tied up in our house.

We'd be better off selling our house, taking that money invested safe using the income to renting an all inclusive 2-bedroom apartment in Toronto then begin the world travel - or- we could up stakes, find a low cost safe haven relative to Toronto (NW Ireland or Malta comes to mind) rent furnished for 500 euros/mth & travel. Even make two trips a year back to Canada to see the kids.

So many options - it can be done on the not so expensive or like the millionaire couple in that link.

$5000/mth or $2000/mth depends on what folks want to do & how they do it