People who never buy?

Johnnyhpipe

How do you pay your rent when you retire?

I'm trying to buy now. Im early 30s so will have a mortgage paid off in early 60s. Some people say "you're mad..rentings the way to go...why do irish people always have to own property...etc etc.." I'm not doing this because im irish and property obsessed, im doing it for the simple practical reason that your income is slashed when you retire - idea being that you would typically own your house outright by then - and as such cannot afford exorbitant rents at that time of your life.

So for people who rent the penthouse for €1700/m their entire life, whats the plan? I'm genuinely curious as it doesnt make sense to me.

Cheers

professore

Maybe they know they will eventually inherit from their parents?

agent graves

type into google "Housing for older people - Citizens Information Board" this document pretty much explains it.

Johnnyhpipe

I know but in that case dont you give up the place you lived your entire life to live in a social housing scheme?

Santa Cruz

patrickpaul wrote: »

type into google "Housing for older people - Citizens Information Board" this document pretty much explains it.

Have you visited some of these places and would you really like to spend your last years there?
If the answer is yes well you are welcome to it. I prefer to have control of my own living situations.

Santa Cruz

Johnnyhpipe wrote: »

How do you pay your rent when you retire?

I'm trying to buy now. Im early 30s so will have a mortgage paid off in early 60s. Some people say "you're mad..rentings the way to go...why do irish people always have to own property...etc etc.." I'm not doing this because im irish and property obsessed, im doing it for the simple practical reason that your income is slashed when you retire - idea being that you would typically own your house outright by then - and as such cannot afford exorbitant rents at that time of your life.

So for people who rent the penthouse for €1700/m their entire life, whats the plan? I'm genuinely curious as it doesnt make sense to me.

Cheers

An adavantage of owning your own property on retirement of course, and a one more Irish people are using, is that you can downsize and use the balance of the funds received to have a great retirement with the knowledge that you have a lump sum available for holidays, life's comforts etc. Why leave it for the kids to piss up against a wall

Labarbapostiza

Santa Cruz wrote: »

Why leave it for the kids to piss up against a wall

When you can piss it up against the wall.

Bepolite

Renting has never made sence to me personally either. I can understand it where flexibility is key, but long term it's a mystry to me. Even my folks, who had rented most their lives did so becuase my Father's job came with a very nice property in the centre of Oxford we wouldn't have been able to afford otherwise. When he moved jobs they purchased, albeit later in life and had the mortgae paid off intime for retirement.

Perhaps with long tern unfurnished rents, say like Germany, that are significantly cheaper than a mortgage, I could understand it - but Ireland with our crazy rents?

Grandpa Hassan

Under a normal scenario, renting would be cheaper than mortgage payments plus the other costs in owning a home (along with inevitable costs associated with the inability to move around), allowing you to build up savings and other assets that will see you through retirement. Leaving you, theoretically, in the same position financially as having owned a home.

But with rents how they are, it is impossible to make savings sufficient to compensate for not having an unencumbered asset in 30 years time.

And there is no sign of things normalizing

Sarah Bear

Not everyone can get a mortgage

syklops

Grandpa Hassan wrote: »

Under a normal scenario, renting would be cheaper than mortgage payments plus the other costs in owning a home (along with inevitable costs associated with the inability to move around), allowing you to build up savings and other assets that will see you through retirement. Leaving you, theoretically, in the same position financially as having owned a home.

But with rents how they are, it is impossible to make savings sufficient to compensate for not having an unencumbered asset in 30 years time.

And there is no sign of things normalizing

We also don't have a culture of long term leasing in this country. My estate agent raised her eyebrows when I asked for a two year lease, and she made a bit of a song and dance about asking the owner if it was ok. The cynical part of me suspects the agent was concerned she wouldn't get a bump in her commission next year. Maybe if longer leases were common we wouldn't have such extremes in rental prices.

Labarbapostiza

syklops wrote: »

We also don't have a culture of long term leasing in this country.

Not really all that true. In the last thirty years, things have been up and down and all around the place. But long term leases were very common.

In some parts of the country, renting was incredibly cheap. In places there was just nominal rents to avoid houses becoming derelict.

My estate agent raised her eyebrows when I asked for a two year lease, and she made a bit of a song and dance about asking the owner if it was ok. The cynical part of me suspects the agent was concerned she wouldn't get a bump in her commission next year. Maybe if longer leases were common we wouldn't have such extremes in rental prices.

They "talked up" a bubble before; and here they go again; they're off!!

TheDriver

The bubble is well and truly being promoted, even govt wants to promote a bubble. Then facilitate building of well thought out housing builds where supply is required for demand and get credit to good builders. And make sure its owner occupiers first in queue

Santa Cruz

Labarbapostiza wrote: »

When you can piss it up against the wall.

Got it in one!

beauf

I know some people who plan to retire to other countries because of the cost of living is cheaper and the healthcare is better. Also Dublin and the bigger cities rent is climbing. But its cheaper outside of that. If you are retired you have cheaper transport options and not stuck for commuting etc. You also see people downsizing and relocating to cheaper places.

Its just at the moment renting especially in Dublin has got out of hand. The Govt are really doing nothing about it. They should put some controls in to kerb reckless lending then let it sort it self out. They should also get back into some form of social housing. At the moment they are messing around with rent controls and tax which is mickey mouse way of avoiding really doing something about it.

Fkall

Grandpa Hassan wrote: »

Under a normal scenario, renting would be cheaper than mortgage payments plus the other costs in owning a home (along with inevitable costs associated with the inability to move around), allowing you to build up savings and other assets that will see you through retirement. Leaving you, theoretically, in the same position financially as having owned a home.

But with rents how they are, it is impossible to make savings sufficient to compensate for not having an unencumbered asset in 30 years time.

And there is no sign of things normalizing

Why would rents be cheaper than a mortgage in normal circumstances?

Dredd_J

Johnnyhpipe wrote: »

How do you pay your rent when you retire?

I'm trying to buy now. Im early 30s so will have a mortgage paid off in early 60s. Some people say "you're mad..rentings the way to go...why do irish people always have to own property...etc etc.." I'm not doing this because im irish and property obsessed, im doing it for the simple practical reason that your income is slashed when you retire - idea being that you would typically own your house outright by then - and as such cannot afford exorbitant rents at that time of your life.

So for people who rent the penthouse for €1700/m their entire life, whats the plan? I'm genuinely curious as it doesnt make sense to me.

Cheers

My thoughts exactly.
Wish I could just rent forever, but as we've seen the last few years, rents can go up big time in very short space of time.

Now to wait for the usual "In Germany .... " posts.

Jellybaby1

I came across this by accident and was also interested in hearing replies. We are just three years away from retirement and the mortgage is already paid off. We still have to pay for maintenance etc. Renters can ask their landlord to pay for a broken window, or sagging gutters or a hole in the roof, but from what I have heard not all landlords take care of their properties. We are taking care of our property so we won't have huge bills in a few years time. Our kids are just working part time as that's all that they could get so if they aren't working when we retire at least they will have a roof over their heads too, they can't afford to have their own homes right now. My generation were brought up to believe that owning is better than renting and that renting is the same as flushing all that money down the toilet. You own nothing at the end of 20 or 30 years and leases are not always renewed. If someone can be assured these days of a steady job for the next 20-30 years then I would recommend getting a mortgage for a house, but who can guarantee that in the present economical climate?

When I think back to my grandmother at the beginning of the 20th century, who was left alone and took in laundry to keep herself and her children going and keep paying the rent on their tenement flat, I don't know how she did that when she got too old to work. The same question applies today.

ted1

Fkall wrote: »

Why would rents be cheaper than a mortgage in normal circumstances?

I was thinking the same, rent pays mortgages so should always be higher.

Dredd_J

Jellybaby1 wrote: »

I came across this by accident and was also interested in hearing replies. We are just three years away from retirement and the mortgage is already paid off. We still have to pay for maintenance etc. Renters can ask their landlord to pay for a broken window, or sagging gutters or a hole in the roof, but from what I have heard not all landlords take care of their properties. We are taking care of our property so we won't have huge bills in a few years time. Our kids are just working part time as that's all that they could get so if they aren't working when we retire at least they will have a roof over their heads too, they can't afford to have their own homes right now. My generation were brought up to believe that owning is better than renting and that renting is the same as flushing all that money down the toilet. You own nothing at the end of 20 or 30 years and leases are not always renewed. If someone can be assured these days of a steady job for the next 20-30 years then I would recommend getting a mortgage for a house, but who can guarantee that in the present economical climate?

When I think back to my grandmother at the beginning of the 20th century, who was left alone and took in laundry to keep herself and her children going and keep paying the rent on their tenement flat, I don't know how she did that when she got too old to work. The same question applies today.

I used to own a house here and own an apartment in the UK.
I would say that averaged over 10 years of ownership on the house I spent about €1500 a year on maintenance, furniture etc. Some years spent virtually nothing. Other years a huge sum.

For the apartment in London the maintenance fees are every year, but on top of that I probably sink in about £1000 or slightly less per year into it averaged out.

People i know who have never owned a house all seem to think that they cost about €20000 per year to run.

Jellybaby1

Yes, if you take care of your property, it will take care of you. My daughter rented an apartment in London for a few years. The landlord could never be contacted, and getting anything done took months instead of days.

This reminds me of an elderly aunt forty years ago when I told her we were getting our own house she said 'that's great, you'll own your own hall door, and if you want to piddle in the corner of your living room, you can!!" Needless to say, we've never piddled in our living room, but its good to know we could, if we wanted to!

When we were getting married and applying for a mortgage in the 70's it was all terrifying for us but we persevered and even got through the recession in the 80's even though things got so bad we almost emigrated at one time, but we stayed.

Grandpa Hassan

ted1 wrote: »

I was thinking the same, rent pays mortgages so should always be higher.

For a functioning BTL market to provide sufficient rental supply, the market rent need only cover the interest only mortgage payments, not capital and interest. BTL landlords borrow on an interest only basis. So in theory, a renter should be able to put aside the capital repayment component themselves in some kind of savings or investment.

Edit: plus expenses plus a yield, of course. But much less than capital and interest payments

nc19

Sarah Bear wrote: »

Not everyone can get a mortgage

Why not?

Dredd_J

nc19 wrote: »

Why not?

Not being able to afford the repayments or the deposit required would be just a couple of reasons.

nc19

Dredd_J wrote: »

Not being able to afford the repayments or the deposit required would be just a couple of reasons.

My sister, single, 30s, with app. 27k pa wage and no deposit got one for 195,000iirc with repayments of 550pm.

If you cant manage the above you shouldnt be trying for a mortgage so therefore not applicable to this discussion.

the op meant, afaics, that if you could afford a mortgage but choose to rent, why?

ted1

nc19 wrote: »

My sister, single, 30s, with app. 27k pa wage and no deposit got one for 195,000iirc with repayments of 550pm.

If you cant manage the above you shouldnt be trying for a mortgage so therefore not applicable to this discussion.

the op meant, afaics, that if you could afford a mortgage but choose to rent, why?

A tracker? 550 for 195000 is very low

syklops

nc19 wrote: »

My sister, single, 30s, with app. 27k pa wage and no deposit got one for 195,000iirc with repayments of 550pm.

If you cant manage the above you shouldnt be trying for a mortgage so therefore not applicable to this discussion.

the op meant, afaics, that if you could afford a mortgage but choose to rent, why?

When was this? 100% Mortgages are gone and have been for several years. When I was 24 I was getting letters saying I was pre-approved for a 100% mortgage of up to 500K. "Nows the time to buy", etc etc. I resisted temptation and didn't apply. I am soooo glad I went with my gut.

If the example you have provided was your sister got a mortgage during the madness, then frankly I don't think your example is applicable to this discussion.

Dermighty

Rent is the price I pay to maintain a certain quality of life.

When I rented I had less money but I lived in town and liked the house.

Dredd_J

nc19 wrote: »

My sister, single, 30s, with app. 27k pa wage and no deposit got one for 195,000iirc with repayments of 550pm.

If you cant manage the above you shouldnt be trying for a mortgage so therefore not applicable to this discussion.

the op meant, afaics, that if you could afford a mortgage but choose to rent, why?

I dont see that ever happening again tbh.
If it does, watch property prices go into the stratosphere.

nc19

Wasnt during the madness. About 2009 or 10 iirc

in terms of the terms, i dont know tbh

syklops

nc19 wrote: »

Wasnt during the madness. About 2009 or 10 iirc

in terms of the terms, i dont know tbh

Thats the second time you have used the acronym iirc(if I remember correctly). Can we get your sister on here to confirm details?

nc19

syklops wrote: »

Thats the second time you have used the acronym iirc(if I remember correctly). Can we get your sister on here to confirm details?

Ill ask her >thumbs up<


Does it really matter if the house was 5k more or less than what i remember?

My point was that if you are working part time in a corner shop and have little or no savings or future prospects then you have no business looking for a mortgage but what i believe the OP was asking was if you had the where with all to get and maintain a mortgage but you choose to rent then why?

I was just using my sister as an example in order to emphasise the above belief.

dar100

nc19 wrote: »

Ill ask her >thumbs up<


Does it really matter if the house was 5k more or less than what i remember?

My point was that if you are working part time in a corner shop and have little or no savings or future prospects then you have no business looking for a mortgage but what i believe the OP was asking was if you had the where with all to get and maintain a mortgage but you choose to rent then why?

I was just using my sister as an example in order to emphasise the above belief.

And I believe your sister had no business getting a mortgage on such a low wage with no deposit, works both ways

beauf

I'd say some people like the idea of not being tied to a location/property even if they never actually take advantage of it.

They've certainly avoided a lot of stress about negative equity and pyrite or not being in the catchment for schools, or near family, maintenance, or near a job. They have the freedom to move as best suits their life at the time. That's a lot of flexibility.

Grandpa Hassan

beauf wrote: »

I'd say some people like the idea of not being tied to a location/property even if they never actually take advantage of it.

They've certainly avoided a lot of stress about negative equity and pyrite or not being in the catchment for schools, or near family, maintenance, or near a job. They have the freedom to move as best suits their life at the time. That's a lot of flexibility.

I don't think anybody denies that they are major benefits of renting. But the OPs question was a more specific one: what do those people to when they are no longer earning and have potentially 20 or more years of renting ahead of them....

beauf

Oh I know. I thought we move alone a little.

As I said earlier...

beauf wrote: »

I know some people who plan to retire to other countries because of the cost of living is cheaper and the healthcare is better. Also Dublin and the bigger cities rent is climbing. But its cheaper outside of that. If you are retired you have cheaper transport options and not stuck for commuting etc. You also see people downsizing and relocating to cheaper places. ...

It give you options in retirement.

Of course people might end up with property and not have saved a pension, or have any other means of income. Which is a whole different issue. But something to consider when stretching to afford a property.

http://brianmlucey.wordpress.com/2012/07/20/pension-and-crises/
http://www.irishtimes.com/business/sectors/financial-services/government-must-act-to-prevent-a-serious-pension-crisis-1.1641770

MouseTail

Those with a large enough pension pot could continue to rent, I would imagine that is a small enough cohort though. Historically they have moved to Social Housing, or already had social housing. Although with our demographic bubble, those working now would be foolish to depend on the Welfare State to house them in old age.

Jellybaby1

beauf wrote: »

Of course people might end up with property and not have saved a pension, or have any other means of income. Which is a whole different issue.

Hubby's pension was going to be very good, before the recent recession that is, every year we get a statement of what it is worth, and every year it goes down by thousands, so what used to be sensible is now being eaten up by the powers that be and we will get squat.

Dredd_J

Jellybaby1 wrote: »

Hubby's pension was going to be very good, before the recent recession that is, every year we get a statement of what it is worth, and every year it goes down by thousands, so what used to be sensible is now being eaten up by the powers that be and we will get squat.

Are you sure its been going down the last 5 years or so.
Mine has been increasing by more than my salary is even before i put in contributions for my salary. It has mad back multiples of the losses that happened in 2007 and 2008.
Its actually going UP by thousands per month.
There must be something wrong if your pension value has been going down.

beauf

I'd say a lot of peoples plans have changed considerably over the last 5yrs.

MadDog76

nc19 wrote: »

My sister, single, 30s, with app. 27k pa wage and no deposit got one for 195,000iirc with repayments of 550pm.

If you cant manage the above you shouldnt be trying for a mortgage so therefore not applicable to this discussion.

the op meant, afaics, that if you could afford a mortgage but choose to rent, why?

She wouldn't get that mortgage today .............

meeeeh

If you are well paid, have good pension and lifestyle or work that takes you around a lot there is no point buying. Or if you live in some very expensive city. And you would be ok when retiring. But in most instances the security of owning your own home wins out for me.

Mrs OBumble

meeeeh wrote: »

If you are well paid, have good pension and lifestyle or work that takes you around a lot there is no point buying. Or if you live in some very expensive city. And you would be ok when retiring. But in most instances the security of owning your own home wins out for me.

OP - this gets back to your original question. If you have planned properly for retirement, and invested in a a diversified range of options, then your income wont' be slashed when you retire, it will simply start coming from different places.

A pension scheme that offers a decent lump sum may give you the ability to buy in a cheaper-to-live in retirement location. Or you may want to continue renting - ideally from a landlord who is willing to give you security of tenure.

And as others have pointed out, if you are low paid and cannot afford to save a pension, that's where the social (really indigent) housing option comes in. In this case, I'd imagine that the sort of housing you will get from the council (or over voluntary housing group) is likely to be similar to what you could afford to rent during your working life.

Jellybaby1

Dredd_J wrote: »

Are you sure its been going down the last 5 years or so.
Mine has been increasing by more than my salary is even before i put in contributions for my salary. It has mad back multiples of the losses that happened in 2007 and 2008.
Its actually going UP by thousands per month.
There must be something wrong if your pension value has been going down.

Very sure!

the_syco

Jellybaby1 wrote: »

Hubby's pension was going to be very good, before the recent recession that is, every year we get a statement of what it is worth, and every year it goes down by thousands, so what used to be sensible is now being eaten up by the powers that be and we will get squat.

Get him to talk to whomever the pension is with, and find out the reason. Most people allow X percent of the pension to be used on stocks. In the boom years, this was good, but now, it may be very bad. Find out all the info, and bring the info to an independent pension advisor to check if it all adds up, or if your hubbie is paying for someone elses mistake!

And in your hubbies case, it is very bad.

The_Conductor

ted1 wrote: »

I was thinking the same, rent pays mortgages so should always be higher.

Contrary to what you believe- the linkage between the two is only a weak correlation. Its far from unusual (especially when prices get out of kilter with market fundamentals- as they now are)- for mortgages to be significantly higher than net rental income.

People who rent have the notion that the landlord is minted, and any rent is cash into their hands, and they are somehow awash in money. Very often- the opposite is far more accurate.

The_Conductor

Dredd_J wrote: »

Are you sure its been going down the last 5 years or so.
Mine has been increasing by more than my salary is even before i put in contributions for my salary. It has mad back multiples of the losses that happened in 2007 and 2008.
Its actually going UP by thousands per month.
There must be something wrong if your pension value has been going down.

I'd echo this.
My annual statement took a nosedive with the financial crisis- but has been climbing (not in a stellar manner, but climbing) ever since.

Note- I have already received a 6 month warning that last year was an aberration- and returns this year could well be less than a quarter what last years were.

People tend to become more risk adverse as they near retirement age- before eventually buying the equivalent of an annuity when they retire. Annuities used be largely based on sovereign bonds- nowadays its more likely to be forestry units or some such- as the net return on sovereign bonds is barely keeping pace with inflation.

As for salary rises- well done to anyone who has managed to get one. We read about them in the papers- but not so much as a sniff of them.

The_Conductor

Grandpa Hassan wrote: »

I don't think anybody denies that they are major benefits of renting. But the OPs question was a more specific one: what do those people to when they are no longer earning and have potentially 20 or more years of renting ahead of them....

Move somewhere like a small village in Portugal, and rent there instead? Living costs a quarter of what they are here- and if they have provided for their pension properly- they should have perhaps 50-60% of their pre-retirement income, which will go a far way elsewhere?

PLUG71

Renting is DEAD money!

Why pay off your landlords mortgage when you could be paying off your own?

The_Conductor

PLUG71 wrote: »

Renting is DEAD money!

Why pay off your landlords mortgage whwn you could be paying off your own?

Lots of people are renting for far less than the cost of their landlord's mortgage- and living in accommodation they'd not be able to afford to buy- thats why?

Its a lifestyle choice. I could just as easily ask you- why buy a two bed hovel in the arse-end of no-where, when you can rent, where you want to live, in a superior property- for less than it would cost you to own something you don't like, where you don't want to live..........?

IRLConor

ted1 wrote: »

I was thinking the same, rent pays mortgages so should always be higher.

In other countries there are larger stocks of older apartment buildings which, presumably, are not mortgaged.

If the landlord only needs to cover refurbishment/maintenance then rents can be lower for comparable profits.