Why do Brits buy instead of rent?
Jun 1st 2010, 1:30 pm
#76
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Re: Why do Brits buy instead of rent?
Thanks for this useful link Rotor, I will now ask for words from previous comments on my financial "nous" to be eaten... it turns out to be cheaper to buy my property!!! Admittedly if the interest rate goes sky high it would be cheaper to rent for the first 16 years...
That calculator doesnt take into account the 10% tax, but I'm glad you got a good deal.
If you stay long term in a property (at least 10-15 years) and interest rates stay low then the vast majority of the time you would be better off buying.
Jun 1st 2010, 1:41 pm
#77
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Re: Why do Brits buy instead of rent?
Our property was valued at over 60 k more than we paid, so I think it was quite a good deal, plus we have a garage and trastero that we could always sell or rent if desperate!! Everyone has told us we got a ganga!!
Last edited by SaritaBarcelona; Jun 1st 2010 at 1:41 pm. Reason: add another word
Jun 1st 2010, 6:01 pm
#78
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Re: Why do Brits buy instead of rent?
I will not be looking to sell my Spanish house (which is mortgage free) for at least another 5 or 6 years - unless something completely unexpected crops up. Although previously I had always felt it was better to buy as rent was wasted money, now I think that when I do sell I will rent rather than buy, for several reasons. Looking around now at rental properties, it seems I could certainly afford to rent somewhere far nicer than I could afford to buy (as I will have a lot more income in 6 years' time when my pensions become payable). Also I just do not want to pay another 10% of the purchase price in legal fees, taxes etc., having already done it once. That money alone could pay a few years' rent, and from what we have seen in the last couple of years there is no kind of guarantee that the price of property would appreciate enough to cover the initial outlay on taxes, etc.
I also feel it would be less complicated for my family who will inherit my estate if they do not have to deal with the added stress of selling a property in another country.
Provided I was able to rent somewhere unfurnished and thus have my own things that I had chosen around me, I think I could live quite happily in rented accommodation.
I also feel it would be less complicated for my family who will inherit my estate if they do not have to deal with the added stress of selling a property in another country.
Provided I was able to rent somewhere unfurnished and thus have my own things that I had chosen around me, I think I could live quite happily in rented accommodation.
Jun 1st 2010, 6:25 pm
#80
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Re: Why do Brits buy instead of rent?
I think if I had a chunk of cash to spend on renting the ideal place then I can understand the appeal of renting. You are in a good position, one that I hope to be in when I am older. I am certainly not against renting as such, but I prefer that the money I am currently earning goes to buy something that will eventually be mine, especially as pensions these days are so low and so risky (I'm not saying that my property is my pension but my pension probably wouldn't be enough to pay rent if things go the way they seem to be!).
Jun 1st 2010, 6:36 pm
#81
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Re: Why do Brits buy instead of rent?
You don't get it. Imagine every month since 20 years ago I have paid all my bills on time but this month I just can't raise enough cash, not because I don't have the assets, but because I don't have them in readies. So I pop round to mum and borrow a couple of grand and pay all my bills to my creditors. When my debtors pay me I give mum her two grand back and don't have a cash flow problem for another 20 years.
Now all you have to do is swap "I" for "the banks", and "mum" for "the government".
And don't think the banks don't have assets because the truth is they own millions of properties in Spain, or at least a far greater share in them than the public as a whole. And maybe your going to say, "but the prices of those properties have gone down" but in most cases that has just wiped the client's share of the equity off the top. I guess in some cases the bank may have lost a few miserable percent, but not in many.
Now all you have to do is swap "I" for "the banks", and "mum" for "the government".
And don't think the banks don't have assets because the truth is they own millions of properties in Spain, or at least a far greater share in them than the public as a whole. And maybe your going to say, "but the prices of those properties have gone down" but in most cases that has just wiped the client's share of the equity off the top. I guess in some cases the bank may have lost a few miserable percent, but not in many.
Jun 1st 2010, 8:22 pm
#82
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Re: Why do Brits buy instead of rent?
You don't get it. Imagine every month since 20 years ago I have paid all my bills on time but this month I just can't raise enough cash, not because I don't have the assets, but because I don't have them in readies. So I pop round to mum and borrow a couple of grand and pay all my bills to my creditors. When my debtors pay me I give mum her two grand back and don't have a cash flow problem for another 20 years.
Now all you have to do is swap "I" for "the banks", and "mum" for "the government".
And don't think the banks don't have assets because the truth is they own millions of properties in Spain, or at least a far greater share in them than the public as a whole. And maybe your going to say, "but the prices of those properties have gone down" but in most cases that has just wiped the client's share of the equity off the top. I guess in some cases the bank may have lost a few miserable percent, but not in many.
Now all you have to do is swap "I" for "the banks", and "mum" for "the government".
And don't think the banks don't have assets because the truth is they own millions of properties in Spain, or at least a far greater share in them than the public as a whole. And maybe your going to say, "but the prices of those properties have gone down" but in most cases that has just wiped the client's share of the equity off the top. I guess in some cases the bank may have lost a few miserable percent, but not in many.
Thousands of builders have gone bust cos they can`t sell the houses they built on money they mortgaged from the banks.
The banks are now stuffed and stuck with houses they have snatched back from the builders and are unable to sell.
Tell me how they haven`t lost money if they mortgaged a house for 300'000 and builders gone down the pan and all they have now is a property that is worth nothing like that and they can`t sell or even rent out ?
Assets are no good if you can`t raise capital off of them, no matter how rich you are.
There are thousands of 2 bed places for rent or sale round here, the only way they will get filled is if the council take them for subsidised housing.
Jun 1st 2010, 8:51 pm
#83
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Re: Why do Brits buy instead of rent?
You have brought up a good point JDR, why on earth don't they create "council housing" or housing associations like in the UK, instead of that ridiculous housing lottery that anyone can register for here. At least it would be a way to recoup some of their money, not have empty properties, and give people who can't buy a chance to live somewhere decent at a fair price. Incidentally, we know a Spanish girl who has wealthy parents and earns loads who was awarded a 3 bedroom flat near Barcelona to buy at a drastically reduced rate (like VPO I think, not 100% sure, but from the ayuntamiento). Her and her partner (not the original one she entered the lottery with!) were awarded one of these swanky flats, they are paying very little per month and are now renting out rooms in it. They have no children, whilst there are people with children in the same town who left empty handed. I'm not into the whole "have children to get a council house" idea but the limited "social housing" system in Spain is just unfair full stop. Anyone know any more about this and how it works?
Jun 1st 2010, 8:56 pm
#84
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Re: Why do Brits buy instead of rent?
You have brought up a good point JDR, why on earth don't they create "council housing" or housing associations like in the UK, instead of that ridiculous housing lottery that anyone can register for here. At least it would be a way to recoup some of their money, not have empty properties, and give people who can't buy a chance to live somewhere decent at a fair price. Incidentally, we know a Spanish girl who has wealthy parents and earns loads who was awarded a 3 bedroom flat near Barcelona to buy at a drastically reduced rate (like VPO I think, not 100% sure, but from the ayuntamiento). Her and her partner (not the original one she entered the lottery with!) were awarded one of these swanky flats, they are paying very little per month and are now renting out rooms in it. They have no children, whilst there are people with children in the same town who left empty handed. I'm not into the whole "have children to get a council house" idea but the limited "social housing" system in Spain is just unfair full stop. Anyone know any more about this and how it works?
The bad thing is, my friend actually worked in London (and still does). He never had any intention of living in the flat, instead he rents it out to 2 Romanian families!
Jun 1st 2010, 9:04 pm
#85
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Re: Why do Brits buy instead of rent?
It tends to be done by lottery (sorteo) and has nothing to do with income or circumstances. I (and I know so do many Spaniards who I have spoken to and forums I have seen) find it incredibly unfair. You only need to have lived in the area for a certain amount of time, and there are some people who get a VPO place when their spouse already owns a flat elsewhere. They are difficult to sell afterwards, there are certain regulations, but some have made a fortune in profit on these homes. Lots of people are calling for a fairer system, but like everything else, this government just sits on its hands and avoids rocking the boat. So much for "socialism"...
Jun 1st 2010, 10:06 pm
#86
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Re: Why do Brits buy instead of rent?
Here's an example of how they haven't really lost as much as people think. I went to a client the other day and he's a bit of a speculator. He owned a flat outright in Altea (value 140,000€). Been investing all his life and decided to cash in some investments and invest in property about 3 years ago. Investments yielded 500,000€. Borrowed 500,000€ from the bank and bought 4 houses (total cost with taxes 1,000,000€). Rent out 3 and decided to live in the 4th. Now 3 houses are empty as the tenants couldn't pay. Sold the flat in Altea for 88,000€ to raise funds to keep up with the mortgages. Current combined value of the 4 house is around 550,000€.
Anyway the bottom line is the bank put in 500,000€ and still owns 500,000€ equity. The speculator put 640,000€ and now has about 80,000€ left minus about 2,000€ every month in payments to the bank. So the bank is, well, laughing all the way to the bank.
Jun 1st 2010, 10:09 pm
#87
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Re: Why do Brits buy instead of rent?
The profits of the BBVA were astronomical last year... say no more...
Jun 2nd 2010, 7:12 am
#88
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Re: Why do Brits buy instead of rent?
Losing a bit of money is just a blip. Yes it caused a bit of a cash flow problem for a few months and the government stepped in where necessary, but that's all in the past now and the banks are back to making a fortune again.
Here's an example of how they haven't really lost as much as people think. I went to a client the other day and he's a bit of a speculator. He owned a flat outright in Altea (value 140,000€). Been investing all his life and decided to cash in some investments and invest in property about 3 years ago. Investments yielded 500,000€. Borrowed 500,000€ from the bank and bought 4 houses (total cost with taxes 1,000,000€). Rent out 3 and decided to live in the 4th. Now 3 houses are empty as the tenants couldn't pay. Sold the flat in Altea for 88,000€ to raise funds to keep up with the mortgages. Current combined value of the 4 house is around 550,000€.
Anyway the bottom line is the bank put in 500,000€ and still owns 500,000€ equity. The speculator put 640,000€ and now has about 80,000€ left minus about 2,000€ every month in payments to the bank. So the bank is, well, laughing all the way to the bank.
Here's an example of how they haven't really lost as much as people think. I went to a client the other day and he's a bit of a speculator. He owned a flat outright in Altea (value 140,000€). Been investing all his life and decided to cash in some investments and invest in property about 3 years ago. Investments yielded 500,000€. Borrowed 500,000€ from the bank and bought 4 houses (total cost with taxes 1,000,000€). Rent out 3 and decided to live in the 4th. Now 3 houses are empty as the tenants couldn't pay. Sold the flat in Altea for 88,000€ to raise funds to keep up with the mortgages. Current combined value of the 4 house is around 550,000€.
Anyway the bottom line is the bank put in 500,000€ and still owns 500,000€ equity. The speculator put 640,000€ and now has about 80,000€ left minus about 2,000€ every month in payments to the bank. So the bank is, well, laughing all the way to the bank.
Actually Santander and BBVA are the 2 banks in a better position because they have diversified investments all around the world.
Jun 2nd 2010, 8:34 am
#89
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Re: Why do Brits buy instead of rent?
If you over-tax or punish banks, the people who suffer are the people who have a stake in them. That's you and I, not some anonymous pin-striped individual in a bowler hat. They'll just move abroad and follow the banks who pull out of britain, or spain, or wherever - to wherever they relocate.
Last edited by pete_l; Jun 2nd 2010 at 8:38 am.
Jun 2nd 2010, 9:28 am
#90
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Re: Why do Brits buy instead of rent?
I really don't see where you are going with this. Assets and readies are two completely different things. The only time the value of assets is important is if you want to use them as security or to convert them into cash. For me, my assets are my house, my cars, my motorbike, my tools, my furniture, etc, all of which change value day to day but the value of which has no bearing on my day to day life. For the bank the assets are a load of properties, and other bonds and investments. If I have a bill to pay I need readies, not assets, so I either need to collect from one of my debtors (clients) or convert some of my assets to readies. The problem though with converting assets into readies is that it takes time and this is why certain banks needed "a bail out". For me (and the bank) the day to day value of my assets is not important as I am not using them for security and not trying to convert them into the common denominator (money). For the banks the assets are even less important because after all it's not the bank that owns them, but the shareholders.