Long term rent versus purchase - South Dublin

mrsWhippy

Hi all,

Looking for some advice on our current situation and would be very interested in your input please.

We're a 33/37 year old couple with a toddler and a second baby on the way. We've been renting in Dublin 14 for the past 4 years in a 3 bed home with garage/garden and a lot of potential. We love the area, love the neighbours and love the house but it has a few issues which will make it difficult when the second baby comes along (mostly to do with layout).

Our joint gross income is €115k and have savings of €130k. We don't have any other loans or outgoings apart from the usual creche/bills and rent of €1350 per calender month.

We're feeling the pressure to buy now as with a second baby on the way, it will be a whole lot more difficult this time next year, and our current property is not ideal for managing 2 kids (something we'd love to change by knocking out a few walls!) We realise we have a great deal on rent - moving to another, more suitable rented property is not an option as we'd only get an apartment for the same money, and an equivalent property would be closer to the 2k per month. Moving out of the area (to somewhere cheaper) is not really an option due to family nearby who help out with childcare.

What we would both love to do is to actually purchase the house we are renting and potentially approach the landlord with an offer (how would we even do this?!). He has a few properties, some in negative equity, and has mentioned before that he would probably have to sell one or more at some stage in the future. Given our financial situation, what would you be inclined to do? Are we mad to consider purchasing given the good deal we have on rent? I know the practical answer is to keep on renting and saving but we're not getting any younger either and would love to have our own family home. I know house prices in this area are just going through the roof, so I'm not even sure we can afford to buy this one - and even if we could, whether we should even consider it.

Your advice and input would be appreciated. Thanks.

ted1

mrsWhippy wrote: »

Hi all,

Looking for some advice on our current situation and would be very interested in your input please.

We're a 33/37 year old couple with a toddler and a second baby on the way. We've been renting in Dublin 14 for the past 4 years in a 3 bed home with garage/garden and a lot of potential. We love the area, love the neighbours and love the house but it has a few issues which will make it difficult when the second baby comes along (mostly to do with layout).

Our joint gross income is €115k and have savings of €130k. We don't have any other loans or outgoings apart from the usual creche/bills and rent of €1350 per calender month.

We're feeling the pressure to buy now as with a second baby on the way, it will be a whole lot more difficult this time next year, and our current property is not ideal for managing 2 kids (something we'd love to change by knocking out a few walls!) We realise we have a great deal on rent - moving to another, more suitable rented property is not an option as we'd only get an apartment for the same money, and an equivalent property would be closer to the 2k per month. Moving out of the area (to somewhere cheaper) is not really an option due to family nearby who help out with childcare.

What we would both love to do is to actually purchase the house we are renting and potentially approach the landlord with an offer (how would we even do this?!). He has a few properties, some in negative equity, and has mentioned before that he would probably have to sell one or more at some stage in the future. Given our financial situation, what would you be inclined to do? Are we mad to consider purchasing given the good deal we have on rent? I know the practical answer is to keep on renting and saving but we're not getting any younger either and would love to have our own family home. I know house prices in this area are just going through the roof, so I'm not even sure we can afford to buy this one - and even if we could, whether we should even consider it.

Your advice and input would be appreciated. Thanks.

It all depends on what you can get the house for and include the renovation costs.

With bought just before our second was born as I wanted the extra security1

You should also consider basing your decision on a single income. You might not want to return to work after the second (congrats ) is born

Santa Cruz

You may be able to strike a good deal to purchase the property but with the market in South Dublin now that is unlikely. He would have no problem selling if it went to market. There is no great tradition of long term letting in Ireland. I would suggest that given your family circumstances you would have to start think seriously about ownership.

mrsWhippy

Santa Cruz wrote: »

You may be able to strike a good deal to purchase the property but with the market in South Dublin now that is unlikely. He would have no problem selling if it went to market.

That's what we're afraid of. Similar properties in the area are going on the market for 450k+ and probably selling for much higher. I think this would be about 100k too expensive for us given our income and savings

We haven't approached the banks yet to see what they would lend us, but we certainly don't want to stretch ourselves either - does anyone know (ballpark) what the banks would lend on the higher salary, 67k?

Thanks

_Kaiser_

As a side note, how ridiculous is it that the only option for people in this country as they get older/start families is to saddle themselves with mountains of debt in the form of a mortgage that they may not even want, but realistically have no other choice but to take despite the impact on finances, job options etc

I'd be in much the same position being in my late 30s but I don't have the savings or clean banking history (what with having been laid off for a year a few years ago and the knock-on effects that had) necessary to even consider it. That's what not "going mad" in the good times got me! If I had I could sit and cry poverty like everyone else but not have to worry about being turfed out if I don't pay this month's mortgage.

So my choices are rent indefinitely and take my chances with the wild west that is the rental market in Ireland, or win the lotto and buy a house!

Great country we live in eh?

Idbatterim

I grew up in the D.14 area, the houses now asking 450k were asking low 300's at their lowest point. If you had such a big deposit, did you not consider buying 2 or 3 years ago? I wasnt in a position to, but certainly would have at the time IF I could have. I went to see a 3 bed semi D in Camberley Oaks the other day asking E1400, unfurnished. How long is the landlord likely to keep the property significantly below market rent?

mrsWhippy

Idbatterim wrote: »

I grew up in the D.14 area, the houses now asking 450k were asking low 300's at their lowest point. If you had such a big deposit, did you not consider buying 2 or 3 years ago? I wasnt in a position to, but certainly would have at the time IF I could have. I went to see a 3 bed semi D in Camberley Oaks the other day asking E1400, unfurnished. How long is the landlord likely to keep the property significantly below market rent?

Of course we considered it! But hindsight is a wonderful thing We are not risk takers and the market seemed so volatile, and given the fact we had just moved into a really nice property with affordable rent, it just didn't seem like the right thing to do at the time.

The landlord hasn't increased the rent since we moved in in 2010 - I think that is partly because he would rather keep a family in the property rather than students (who he had before us) - we keep the property in good nick for him and do a lot of maintenance for him too. Still I wouldn't be surprised if he considered a small hike in rent this year ....

JDD

On your income, I would imagine you would be able to get a mortgage of for a house valued at circa €380,000. Myself and my husband have similar incomes and also have No.2 on the way - you can check yourself on the AIB mortgage calculator for a ballpark figure.

Therefore, you would need a deposit of €38,000 (drawing down a mortgage of €342k), plus €70,000 to make up the difference should the price of the house be €450,000. Add in your stamp duty and solicitor fees and you have another bill of circa €7,000 to pay. Leaving you with €15k in your saving account.

Would you be willing to reduce your savings account by that much? It would be a while before you would be able to save up enough again to start making renovations to the house.

Monthly mortgage repayments on a mortgage of €342k over 25 years, where the loan to value is between 80% and 90% (as in your case) would leave you with a monthly mortgage payment of around €1900 (looking at PTSB rates). Shopping around might give you a repayment of a bit less than this, but it would still be a big hike from €1350 a month. Can you afford this? Are you/is your partner thinking of staying at home part-time/full-time at any point in the future to take over some of the childcare? These are all things you would have to discuss.

maninasia

Wow, 115k euro income (pre-tax) still not enough to buy a decent house. That's Ireland for you!

1,900 euro/month is quite a commitment, on a single wage that would not be leaving much to spare at all. Then you have the high probability of interest rates going up in the future, sooner or later it will happen.

It may depend on the type of jobs that you have more than anything, if you have a high chance of earning more in the future or have high job security.

murphaph

maninasia wrote: »

Wow, 115k euro income (pre-tax) still not enough to buy a decent house. That's Ireland for you!

1,900 euro/month is quite a commitment, on a single wage that would not be leaving much to spare at all. Then you have the high probability of interest rates going up in the future, sooner or later it will happen.

It may depend on the type of jobs that you have more than anything, if you have a high chance of earning more in the future or have high job security.

Don't forget the most vulnerable aspect of all: health. No matter how good the job or how "secure" it is...if you develop a condition that forces you out of the workplace you need to have that covered, especially if the roof over your head depends on a single wage.

MouseTail

Idbatterim wrote: »

I grew up in the D.14 area, the houses now asking 450k were asking low 300's at their lowest point. If you had such a big deposit, did you not consider buying 2 or 3 years ago? I wasnt in a position to, but certainly would have at the time IF I could have.

I think you are rewriting history there. You were a bear at the bottom, not one of the bullies, but you most definitely were a bear on here.

Barely Hedged

Kaiser2000 wrote: »

As a side note, how ridiculous is it that the only option for people in this country as they get older/start families is to saddle themselves with mountains of debt in the form of a mortgage that they may not even want, but realistically have no other choice but to take despite the impact on finances, job options etc

I'd be in much the same position being in my late 30s but I don't have the savings or clean banking history (what with having been laid off for a year a few years ago and the knock-on effects that had) necessary to even consider it. That's what not "going mad" in the good times got me! If I had I could sit and cry poverty like everyone else but not have to worry about being turfed out if I don't pay this month's mortgage.

So my choices are rent indefinitely and take my chances with the wild west that is the rental market in Ireland, or win the lotto and buy a house!

Great country we live in eh?

Plenty of places in Dublin are still affordable.

Theyre never going to give them away for free.

Lombardo86

Barely Hedged wrote: »

Plenty of places in Dublin are still affordable.

Theyre never going to give them away for free.

Can you elaborate? What do you mean by affordable? According to average wage - or your wage?

Truth is - prices are rising. I am noticing houses that were on the market 3-4 months ago disappearing and now reappearing (in some cases) with an addition 40k+ on the asking price. This is for areas in D12-D14-24

Where is "affordable". That term is used loosely - Affordable to me is having a home and still being able to do the things i like doing. Not paying x% of my wages on a house and having to sit in the living room doing nothing day in day out to afford the house :-)

Barely Hedged

Lombardo86 wrote: »

Can you elaborate? What do you mean by affordable? According to average wage - or your wage?

Truth is - prices are rising. I am noticing houses that were on the market 3-4 months ago disappearing and now reappearing (in some cases) with an addition 40k+ on the asking price. This is for areas in D12-D14-24

Where is "affordable". That term is used loosely - Affordable to me is having a home and still being able to do the things i like doing. Not paying x% of my wages on a house and having to sit in the living room doing nothing day in day out to afford the house :-)

You can buy three beds in Tallaght for between €150k - €200k.

How cheaper than that would you class "affordable", to turn the question back around at you?

Larry Wildman

Barely Hedged wrote: »

You can buy three beds in Tallaght for between €150k - €200k.

How cheaper than that would you class "affordable", to turn the question back around at you?

Not being funny, but who wants to live in Tallaght?

murphaph

Larry Wildman wrote: »

Not being funny, but who wants to live in Tallaght?

I'd like to live on Shrewsbury Road but I'll never be able to afford to. People don't always get to live where they would like/want. Affordability is probably the biggest issue when buying a property.

Tallaght is also a big place with mature, quiet estates by the way.

It also sometimes takes a bit of gumption to buy somewhere that is "up and coming". I bought a couple of flats in Neukölln in Berlin. I took an educated gamble that the area would gentrify and it has. Areas of Dublin will also gentrify and become desirable. It's just a question of which ones.

The new postcodes could have a huge impact on the Dublin property market IMO. Places that are currently in "undesirable" postal districts may receive "anonymous" post codes.

kitchenkid

have you considered spending your 130k to outright purchase a house, outside Dublin? no mortgage, future earnings are yours!

GavMan

murphaph wrote: »

I'd like to live on Shrewsbury Road but I'll never be able to afford to. People don't always get to live where they would like/want. Affordability is probably the biggest issue when buying a property.

Tallaght is also a big place with mature, quiet estates by the way.

It also sometimes takes a bit of gumption to buy somewhere that is "up and coming". I bought a couple of flats in Neukölln in Berlin. I took an educated gamble that the area would gentrify and it has. Areas of Dublin will also gentrify and become desirable. It's just a question of which ones.

The new postcodes could have a huge impact on the Dublin property market IMO. Places that are currently in "undesirable" postal districts may receive "anonymous" post codes.

To elaborate, places like Belgard Heights and Kingswood are just a quiet as many parts of SCD. Some very big houses suitable for growing families.

Would pick one up for much less than 300k. Putting 100k down would leave a 25year mortgage of less than the OP's rent by about 200 quid...

Food for thought but the OP is tied to their location due to family child care help

mrsWhippy

kitchenkid wrote: »

have you considered spending your 130k to outright purchase a house, outside Dublin? no mortgage, future earnings are yours!

We have indeed - but I guess the commute into the city would be a deal breaker. I/We really don't want to end up spending 3+ hours a day travelling and only getting to see the kids after 7pm But yes, it's certainly a tempting idea for sure.

maninasia

Getting home by 7pm would be seen as pretty good for many people around the world, just giving a bit of perspective here, especially for people earning good money. That's just people doing overtime let alone commuting by the way!
Suggestions to look into less obviously desirable areas are good in my opinion. But safety and security is always going to be worth more euro.

Millem

mrsWhippy wrote: »

We have indeed - but I guess the commute into the city would be a deal breaker. I/We really don't want to end up spending 3+ hours a day travelling and only getting to see the kids after 7pm But yes, it's certainly a tempting idea for sure.

I agree with you, it is not worth it! You wouldn't get to even spend any time with your babies as the probably go to bed at 7? Plus you would also spend a fortune in petrol! I think you have an unbelievable deal at the moment. House prices have gone crazy in south dublin. Houses that were going for in the early to mid €300,000s and now going for over €500,000! And asking in the €400,000s. The areas where we are looking at you can't buy a 3 bed semi for €400,000 it is not Shrewsbury road either! We are prepared to stay renting and even if our rent goes up to say €1800 it is better than us buying a 2 bed house (at today's prices) with a tiny garden and probably no driveway and have a 35 year mortgage of €1500!! I watched David McWilliams on the late late and he says the market is overheating. Even if he is wrong (and I am wrong) every year we have more money saved!

Barely Hedged

Larry Wildman wrote: »

Not being funny, but who wants to live in Tallaght?

I thought this was about affordability in South Dublin or have i just stumbled upon the real reason i.e. i used to be able to afford to buy a house in Dublin 2/4/6/w/14 etc but now that the housing market has moved i cant?

In the case of your post, should the thread be relabelled property snobbery in South Dublin?