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Renting V Buying

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24

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    #32
    sullydublin
    Registered Users Posts: 179 ✭✭sullydublin


    djimi wrote: »
    Household charge is not applicable to renters.

    Id say €100-€150 a month is probably a little on the low side, but certainly €200 a month should be a fairly safe bet unless you are considering things like 100MB broadband or having all the premium TV channels or whatever.

    As for UPC i was looking at the €69 bundle offer, As much as i would love sky sports i will hold off till we find our feet.

    Done a quick budget & after we have paid for everything i.e shopping etc we should be left with about €1,500 roughly between us for the month.

    As for PAYE taxes will i get much credits for renting ?


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    #33
    djimi
    Registered Users Posts: 13,238 ✭✭✭✭djimi


    As far as I know tax credits for rent relief only apply to those who have been renting prior to 2011. I dont think anyone renting since 2011 can apply.


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    #34
    Rasmus
    Registered Users Posts: 2,075 ✭✭✭Rasmus


    This may be off-topic at this point but I am replying to the original posting.

    Having experience as both a renter and homeowner I would have to say that owning is less of a headache.

    Being saddled in debt, for lack of a better term, is IMO preferable to the lack of security one has as a tenant in Ireland.

    It is not a 'rent is dead money' issue that so many people like to dismiss, but a simple matter of having rights. Ireland is not like other European countries where tenants have rights and for the most part, these rights are respected.

    I have been appalled to realise that landlords here are allowed to let their obligations fall by the wayside (and when I say allow, I mean they can get away with it for years even, before they are held accountable).

    Ireland is not a good place to rent in, if you have any other option. I am sure landlords will furiously disagree and that is understandable and I do know there are some great landlords out there - I had one a few years ago myself.

    BTW I am comparing buying with long-term renting. OP you should rent first if you are young.


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    #35
    stevedublin
    Registered Users Posts: 979 ✭✭✭stevedublin


    Cavehill Red wrote: »
    It's significantly cheaper to rent than buy in pretty much all residential sectors of the Irish market.

    This is simply false. It is cheaper to make mortgage payments + any management fees than you would pay in rent, at least in the major urban areas.


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    #36
    Zamboni
    Registered Users Posts: 4,305 ✭✭✭Zamboni


    stevedublin wrote: »
    This is simply false. It is cheaper to make mortgage payments + any management fees than you would pay in rent, at least in the major urban areas.

    Even so, in isolation, that would not be a reason to buy.


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    #37
    mdebets
    Registered Users Posts: 1,747 ✭✭✭mdebets


    StillWaters wrote: »
    Also, if the renter was disciplined enough to save, a large proportion of that pension pot wl go on housing in old age whereas the purchaser has no accommodation costs.
    The last one is not true. There is a very high chance, that expensive refurbishments need to be done, if you lived in your house for 30 or 40 years, so you need money for that. You might need a new heating system, or your kitchen needs new appliances, all things that are not cheap.
    So your accommodation isn't free, when you have paid off the mortgage.


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    #38
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    mdebets wrote: »
    The last one is not true. There is a very high chance, that expensive refurbishments need to be done, if you lived in your house for 30 or 40 years, so you need money for that. You might need a new heating system, or your kitchen needs new appliances, all things that are not cheap.
    So your accommodation isn't free, when you have paid off the mortgage.
    Of course not, but presumingly you have maintained your home, so you're still looking at about 10% of the annual cost of the renter.

    I'd love to see stats that show renters accumulate larger savings/pensions than purchasers in any case. I simply don't believe that is the case.


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    #39
    sullydublin
    Registered Users Posts: 179 ✭✭sullydublin


    Another question is €1,500 enough for two people to live on after all rent & bills have been paid for ?


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    #40
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    sullydublin wrote: »
    Another question is €1,500 enough for two people to live on after all rent & bills have been paid for ?

    Should be - good rule of thumb is have 3 months combined wages in savings and save a minimum of 10% of your wages every month.

    Beyond that you should be saving for a deposit! :D


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    #41
    sullydublin
    Registered Users Posts: 179 ✭✭sullydublin


    Procrastastudy wrote: »
    Should be - good rule of thumb is have 3 months combined wages in savings and save a minimum of 10% of your wages every month.

    Beyond that you should be saving for a deposit! :D

    Cool thanks for that we are going to hold off till after Christmas for a place.

    Just nervous for both of us , as it will be our first time ever out of the nest :eek:
    Should be fun !!


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    #42
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    sullydublin wrote: »
    Cool thanks for that we are going to hold off till after Christmas for a place.

    Just nervous for both of us , as it will be our first time ever out of the nest :eek:
    Should be fun !!

    It will be; just don't rush into anything its a renters/buyers market.


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    #43
    sullydublin
    Registered Users Posts: 179 ✭✭sullydublin


    Procrastastudy wrote: »
    It will be; just don't rush into anything its a renters/buyers market.

    We have the area picked i know it very well as i grow up near by, So just to wait for the right apartment to come on the market :D Little excited to be honest.

    Does the house hold tax effect the Renter ?


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    #44
    ted1
    Registered Users Posts: 23,289 ✭✭✭✭ted1


    djimi wrote: »
    Buy apartment this year: €240k
    Buy apartment next year: €220k
    Cost to rent in mean time: €9k
    Amount saved: €11k

    Whats not to understand...?

    Or to use your example; an apartment bought for €240k in 2006 would probably sell for what, lets say €160k now maybe? So thats €80k drop. Lets say that same apartment rented for a grand a month, thats €72k to rent the same place in that time. Thats a saving of €8k before you factor in management fees (maybe €1k a year), mortgage interest, insurance etc.

    Obviously Im talking about a very specific set of circumstances where we have had a property crash and prices have gone through the floor, but that is the situation that this country is currently in.

    Im not suggesting renting indefinately, but at this moment in time renting is very much not dead money, not if you are saving more than you are spending by not buying a house.
    what makes you think prices are going to fall? Houses prices in SoCoDu are increasing. Apartments are a write off, but houses are selling and increasing monthly.

    I know other areas are still falling but it really depends where the op is looking. You can't make make blanket claims.


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    #45
    Cavehill Red
    Registered Users Posts: 6,109 ✭✭✭Cavehill Red


    stevedublin wrote: »
    This is simply false. It is cheaper to make mortgage payments + any management fees than you would pay in rent, at least in the major urban areas.

    Not in my experience. It's a buyer's market on both sides, and the cuts in rent allowance are filtering through to landlords. If they want reliable rent from employed tenants, they're having to accept much, much less than advertised prices.


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    #46
    Theboinkmaster
    Registered Users Posts: 3,968 ✭✭✭Theboinkmaster


    ted1 wrote: »
    what makes you think prices are going to fall? Houses prices in SoCoDu are increasing. Apartments are a write off, but houses are selling and increasing monthly.

    I know other areas are still falling but it really depends where the op is looking. You can't make make blanket claims.

    No they are not and yes i agree :rolleyes:


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    #47
    Theboinkmaster
    Registered Users Posts: 3,968 ✭✭✭Theboinkmaster


    stevedublin wrote: »
    This is simply false. It is cheaper to make mortgage payments + any management fees than you would pay in rent, at least in the major urban areas.

    You're incorrect as you're not factoring in all the other costs associated with ownership such as property tax and capital depreciation.


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    #48
    stevedublin
    Registered Users Posts: 979 ✭✭✭stevedublin


    Theboinkmaster wrote: »
    You're incorrect as you're not factoring in all the other costs associated with ownership such as property tax and capital depreciation.

    Property tax is only €100 this year.
    "Capital depreciation" is a red herring, it is only really relevant if you want to sell shortly after buying. Most people buy for the long haul. If they want to trade up later, the property they want to trade up to would also be cheaper if property prices are falling. Also, what if property prices go up, have you factored that in? Then capital depreciation becomes capital appreciation further making buying more attractive.


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    #49
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    Theboinkmaster wrote: »

    You're incorrect as you're not factoring in all the other costs associated with ownership such as property tax and capital depreciation.
    Property tax will be borne by tenants. Its a nonsense to think it wont be passed on.

    If renting property becomes loss making for LL they exit the Market, thus tightening supply in the rental Market further.


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    #50
    Theboinkmaster
    Registered Users Posts: 3,968 ✭✭✭Theboinkmaster


    stevedublin wrote: »
    Property tax is only €100 this year.
    "Capital depreciation" is a red herring, it is only really relevant if you want to sell shortly after buying. Most people buy for the long haul. If they want to trade up later, the property they want to trade up to would also be cheaper if property prices are falling. Also, what if property prices go up, have you factored that in? Then capital depreciation becomes capital appreciation further making buying more attractive.

    Absolute nonsense it is a very real cost, especially in the middle of a property crash.

    Buy house now for €500k. Wait 2 years and buy same house for €400k.

    That €100k is real cash lost if you didn't wait to buy. If it's borrowed it's more like €130k over the life of a mortgage.

    And if you think prices are going up soon you're deluded :rolleyes:


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    #51
    Theboinkmaster
    Registered Users Posts: 3,968 ✭✭✭Theboinkmaster


    StillWaters wrote: »
    Property tax will be borne by tenants. Its a nonsense to think it wont be passed on.

    If renting property becomes loss making for LL they exit the Market, thus tightening supply in the rental Market further.

    That only applies to rental properties but at the end of the day increasing property taxes means the cost of owning your own home will increase. And i doubt landlords will be able to pass 100% of it on so it would eat into their margin. Also that tax was just an illustrative example of ownership costs, which the OP left off.


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    #52
    stevedublin
    Registered Users Posts: 979 ✭✭✭stevedublin


    Theboinkmaster wrote: »
    Absolute nonsense it is a very real cost, especially in the middle of a property crash.

    Buy house now for €500k. Wait 2 years and buy same house for €400k.

    That €100k is real cash lost if you didn't wait to buy. If it's borrowed it's more like €130k over the life of a mortgage.

    And if you think prices are going up soon you're deluded :rolleyes:

    I have no idea if property prices are going up and down over the next few years. Even if they do go down short term, it shouldn't matter too much if they go up long term (unless the buyer intends to sell again in the short term).
    Is your estimated 20% drop in property prices guaranteed? Can you prove that there definitely will be this drop?


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    #53
    Theboinkmaster
    Registered Users Posts: 3,968 ✭✭✭Theboinkmaster


    stevedublin wrote: »
    Even if they do go down short term, it shouldn't matter too much if they go up long term (unless the buyer intends to sell again in the short term).

    Do I have to spell it out for you, i keep having to repeat myself! By waiting a few years you're potentially savings thousands, potentially hundreds of thousands of euro. so it does matter. My figures are illustrative but the point seems to go over your head, it's basic economics/maths. Why buy something today for €5 when in 2 days it will mostly likely be less.

    if you don't accept we're within a property crash then there's no point in discussing it with you.

    yeah prices are going up buy buy buy :cool:


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    #54
    stevedublin
    Registered Users Posts: 979 ✭✭✭stevedublin


    Theboinkmaster wrote: »
    . Why buy something today for €5 when in 2 days it will mostly likely be less.
    Thats fine if you know for sure that it would be worth less in two days, but people dont know for sure what way property prices will be going.
    Even if they do go down, it may be harder to get a mortgage in two years time (very few people are wealthy enough to be cash buyers).
    Finally, your calculations have failed to take into account the money saved by not renting. By renting you are paying more to stay in the same place you would be paying less for the mortgage. Also, if you buy now over waiting 2 years, you would have 2 years of your mortgage paid off.


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    #55
    Theboinkmaster
    Registered Users Posts: 3,968 ✭✭✭Theboinkmaster


    stevedublin wrote: »
    Thats fine if you know for sure that it would be worth less in two days, but people dont know for sure what way property prices will be going.
    Even if they do go down, it may be harder to get a mortgage in two years time (very few people are wealthy enough to be cash buyers).
    Finally, your calculations have failed to take into account the money saved by not renting. By renting you are paying more to stay in the same place you would be paying less for the mortgage. Also, if you buy now over waiting 2 years, you would have 2 years of your mortgage paid off.

    Ah i give up, most of that post is pure nonsense.


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    #56
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    Theboinkmaster wrote: »

    Ah i give up, most of that post is pure nonsense.
    Bottom line is if you believe that house prices will drop 20% in 2 years, as in your illustrative figures, then yes renting makes more sense.


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    #57
    Theboinkmaster
    Registered Users Posts: 3,968 ✭✭✭Theboinkmaster


    StillWaters wrote: »
    Bottom line is if you believe that house prices will drop 20% in 2 years, as in your illustrative figures, then yes renting makes more sense.

    Yes I agree.


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    #58
    stevedublin
    Registered Users Posts: 979 ✭✭✭stevedublin


    StillWaters wrote: »
    Bottom line is if you believe that house prices will drop 20% in 2 years, as in your illustrative figures, then yes renting makes more sense.

    Assuming you are correct, and assuming that lenders will be giving out mortgages as they are now in 2 years time. Lots of assumptions.
    People who bought in 2006 assumed prices would continue to go up, they were proven wrong.


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    #59
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    The problem with your argument is no-one believes there is a 20% drop on the cards over the next 2 years.


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    #60
    Theboinkmaster
    Registered Users Posts: 3,968 ✭✭✭Theboinkmaster


    StillWaters wrote: »
    The problem with your argument is no-one believes there is a 20% drop on the cards over the next 2 years.

    20% was just used in an illustrative example - could be 5% or could be 30%.

    We'll have to agree to disagree on the extent of future drops but IMO there's alot more to come, and the economic data supports this just luke in 2006 it supported the pending crash. End of mortgage interest relief, banks not lending, high unemployment & emigration, increasing taxes, unstable euro, increasing property taxes, potential release of NAMA stock, increasing interest rates etc.


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    #61
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    There is a big difference betwen 5 and 30%, and indeed a 5% drop would still make it more advantageous to buy.

    Say the average house, at €167,000, mortgage of €150,000, pays a monthly mortgage of €800 odd, based on 4.25% SVR. Couple of 30 years olds. Total cost of the mortgage is €240,000 for life time accommodation.

    The renter, for the same property, will pay a whopping €1,112,000 for lifetime ocupation, based on 3% inflation.


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