cost of owning a house

sdraobs

hi, im thinking of buying (currently renting) but from a pure economics view, trying to work out what costs i have that i wouldnt have if i was renting. As in not worried of the psychological benefits of owning over renting (security, noy worrying about being turfed out by landlord). is there any additional i am missing

1. mortgage repayments
2. property tax
3. management company fee (if applicable)
4. structural repairs (roof, windows,)
5. buildings insurance
6. redecoration after a few years - new carpets, new kitchen,
7. applicances (replace dishwasher/washing machine when they break)
8. furniture
8. Gardeners


Am i missing anything else? i am not including utilities, or tv licence as ill have to pay them anyway as a tenant.


Having read this list I'm thinking of staying renting. Whoever said renting was dead money is a clown.

aloooof

You need to get life assurance as part of being granted a mortgage.

Also worth bearing in mind tho that the older you get, the less you may be able to borrow, so there's an opportunity cost in that while renting.

gmisk

Paying for bins.

It's worth it to buy IMO dread to think what my rent would be in Dublin if I hadn't now!

heebusjeebus

sdraobs wrote: »

Whoever said renting was dead money is a clown.

:rolleyes:
Will you have the same opinion in your twilight years trying to afford rent for a bedsit?

c.p.w.g.w

heebusjeebus wrote: »

:rolleyes:
Will you have the same opinion in your twilight years trying to afford rent for a bedsit?

Yeah imagine trying to pay rent on a state pension

sdraobs

heebusjeebus wrote: »

:rolleyes:
Will you have the same opinion in your twilight years trying to afford rent for a bedsit?

yeah its about saving for twilight years, so economics comes into it. if i put money into a pension rather than mortgage capital repayments i might end up better off. so i need to work out cost of renting v home ownership.

question will be will i have the same opinion trying to afford the heating bill in my twilight years as opposed to basking with a big pension

aloooof

sdraobs wrote: »

yeah its about saving for twilight years, so economics comes into it. if i put money into a pension rather than mortgage capital repayments i might end up better off. so i need to work out cost of renting v home ownership.

question will be will i have the same opinion trying to afford the heating bill in my twilight years as opposed to basking with a big pension

You might, but it's a risk. And it's not an either / or scenario. You could contribute (albeit, less) to your pension while paying a mortgage. That splits the risk.

If your mortgage happens to be less then your rent (which would be the case for a lot of people) you could put the surplus into your pension and have the best of both worlds.

lalababa

Don't you get rent allowance on a state pension?? I'm sure you do.
Pension @ c. 210 euro, rent allowance of rent minus c.25 euro. Leaving 185 euro. Free electric/heating/phone/tv/travel/med.s etc. etc. Steak at 10euros/kg..you can live the life of Rielly. Also can have what 50k in the bank?

heebusjeebus

sdraobs wrote: »

yeah its about saving for twilight years, so economics comes into it. if i put money into a pension rather than mortgage capital repayments i might end up better off. so i need to work out cost of renting v home ownership.

question will be will i have the same opinion trying to afford the heating bill in my twilight years as opposed to basking with a big pension

You could potentially be paying the same renting as for a mortgage so not sure what your saying here makes sense.
I've a mortgage but I'm also saving and paying for a pension.

sdraobs

OSI wrote: »

What do you plan on doing when you retire?

not sure but if ive saved money by renting and dont have the common problem of an illiquid asset, im free to venture and rent where i want.

aloooof

sdraobs wrote: »

not sure but if ive saved money by renting and dont have the common problem of an illiquid asset, im free to venture and rent where i want.

First time I've heard of owning a house as a "common problem".

nw5iytvs0lf1uz

op just remember that the tide is turning and i believe within ten years it will have completely turned.
the plan is for all small landlords to be gone, the only landlords left will be companies, charities and councils.
i have told my clients, most own 1 rental but some more, they should sell now rather then deal with what is coming.

So maybe rent will not be dead money after all due to the rights of the tenant.
For example i can see rental properties only being sold with tenant in situ.
When you think RTB and HAP/Council are going to have more power. Time for landlords to sell or increase their stock.

sdraobs

aloooof wrote: »

First time I've heard of owning a house as a "common problem".

ever see ads on the uk tv stations for retirement loans. many retirees have no income but a large house. capital rich but income poor. takes time to sell a house and get some liquidity.

heebusjeebus

sdraobs wrote: »

not sure but if ive saved money by renting and dont have the common problem of an illiquid asset, im free to venture and rent where i want.

If you own a property you can sell it and buy another. Cash sale.
You're not tied to a particular area when you retire.

sdraobs

Greta Full Specimen wrote: »

op just remember that the tide is turning and i believe within ten years it will have completely turned.
the plan is for all small landlords to be gone, the only landlords left will be companies, charities and councils.
i have told my clients, most own 1 rental but some more, they should sell now rather then deal with what is coming.

So maybe rent will not be dead money after all due to the rights of the tenant.
For example i can see rental properties only being sold with tenant in situ.
When you think RTB and HAP/Council are going to have more power. Time for landlords to sell or increase their stock.

Thanks for the insight Greta Full Specimen. good to know someone thinks my idea isnt bonkers.

ArrBee

You mention repairs and redecoration but there is also general upkeep.
Think painting, chimney, boiler servicing, gutters (can maybe do yourself), etc.

antoinolachtnai

The cost you have missed is renewal/renovation. Any house needs renewal (as oppposed to repairs) every few decades. You can do this bit by bit (windows one year, roof another and so on) or in one ‘big bang’ after a few decades. But no matter what, this regular reinvestment is required.

sdraobs

ArrBee wrote: »

You mention repairs and redecoration but there is also general upkeep.
Think painting, chimney, boiler servicing, gutters (can maybe do yourself), etc.

thanks, especially on mentioning the boiler. hadnt thought of that. wonder how much that will be to replace.

aloooof

sdraobs wrote: »

ever see ads on the uk tv stations for retirement loans. many retirees have no income but a large house. capital rich but income poor. takes time to sell a house and get some liquidity.

I actually haven't seen ads like this. But it any case, the main thing is to understand the risks involved with whatever approach you take, and to do your sums.

(As an aside, you mentioned saving money by renting. For a lot of people, a mortgage would actually work out cheaper than their current rent).

sdraobs

antoinolachtnai wrote: »

The cost you have missed is renewal/renovation. Any house needs renewal (as oppposed to repairs) every few decades. You can do this bit by bit (windows one year, roof another and so on) or in one ‘big bang’ after a few decades. But no matter what, this regular reinvestment is required.

i know the cost is like asking how long a piece of string is.

But say a typical say 20 year old 4bed semi D house with nothing unusual about it. are we talking 5k euro a year in renovation, repairs, property tax and everyhing i have listed in op.

so if a mortgage is 800 plus say 500 on renovations/repairs. Then this 1300 alother is alot more than rent of say 1000euro for example. im just trying to do the figures before i commit to buy.

aloooof

sdraobs wrote: »

i know the cost is like asking how long a piece of string is.

But say a typical say 20 year old 4bed semi D house with nothing unusual about it. are we talking 5k euro a year in renovation, repairs, property tax and everyhing i have listed in op.

so if a mortgage is 800 plus say 500 on renovations/repairs. Then this 1300 alother is alot more than rent of say 1000euro for example. im just trying to do the figures before i commit to buy.

Depends on where you buy but 800 p/m mortgage for a 4 bed semi-D sounds optimistic.

In any case, in this scenario, you're effectively paying 300 extra per month over your rent towards the capital. Assuming a 30 year mortgage, that's 108k extra versus renting, but you'll have an asset worth, what, 250k+ after it?

If you think the 108k you've saved can make you more than the price of the house after the 30 years (and you're comfortable with the risk), then there's your answer.

EDIT: I've done a very basic compounding exercise per year of the money you'd save while renting. Assuming a 4% return, that would accumulate to ~202k after the 30 years.

nw5iytvs0lf1uz

aloooof wrote: »

Depends on where you buy but 800 p/m mortgage for a 4 bed semi-D sounds optimistic.

In any case, in this scenario, you're effectively paying 300 extra per month over your rent towards the capital. Assuming a 30 year mortgage, that's 108k extra versus renting, but you'll have an asset worth, what, 250k+ after it?

If you think the 108k you've saved can make you more then the price of the house after the 30 years (and you're comfortable with the risk), then there's your answer.

while i agree with you - the question is what will he do with this asset?
Good chance the fair deal in 30 plus years from now could take all of it.


also OP remember that an unemployed tenant can get hap, an unemployed house owner gets f all but grief. from 2008 to 2010 my local town had 10 suicides that i know of because of pressure being put on the family home by banks. That is important because the issues with national and private debt have not gone away and i think are getting worse.

The op forgot contents insurance, some of the new A-rated houses must be getting close to a maintenance-free house as is possible?.

L1011

mariaalice wrote: »

The op forgot contents insurance, some of the new A-rated houses must be getting close to a maintenance-free house as is possible?.

Maintenance free? Not a hope.

MHRV plant, controllers that have a design life (and supported life/security update guarantee) of under a decade are two things I can think of straight away

Sure you're going to have modern windows and doors that don't need much work done for 20 years and may not even need washing and more modern paints on the outside but you are introducing potential failure points.

Ursus Horribilis

It depends on what you define as alot(sic). What rent are you paying at the moment?

Upforthematch

sdraobs wrote: »

1. mortgage repayments
2. property tax
3. management company fee (if applicable)
4. structural repairs (roof, windows,)
5. buildings insurance
6. redecoration after a few years - new carpets, new kitchen,
7. applicances (replace dishwasher/washing machine when they break)
8. furniture
9. Gardeners


Am i missing anything else? i am not including utilities, or tv licence as ill have to pay them anyway as a tenant. .

Think you've most of them. Here's a few more

-Life assurance
-BER and insulation upgrades
-Alarm
-Gates/fences
-Curtains/blinds
-Shed

Ursus Horribilis

How often do most people have to replace their shed, blinds and house alarm?

Black_Knight

Ursus Horribilis wrote: »

It depends on what you define as alot(sic). What rent are you paying at the moment?

Depends what type house your renting now Vs what house you would buy. The houses I rented were always sufficient for my needs at the time, while the house I bought has some future thought to it.

m5ex9oqjawdg2i

Why don't we throw in the following while we are at it;

Swimming pool
Gate lodge
Wine cellar maintenance
HEPA filtration system
Underground parking

Some of the suggestions on here are equally ridiculous.

Upforthematch

Ursus Horribilis wrote: »

How often do most people have to replace their shed, blinds and house alarm?

Shed/ blinds -depends. Every 10 years perhaps? Still a cost of owning a home.

Alarm - annual maintenance change for monitored or unmonitired for most

m5ex9oqjawdg2i

Upforthematch wrote: »

Shed/ blinds -depends. Every 10 years perhaps? Still a cost of owning a home.

Alarm - annual maintenance change for monitored or unmonitired for most

Nonsense.

Ursus Horribilis

I got rid of a 20+ year old wooden shed from the back garden last year. Replaced it with a steel one that I expect to last for quite a while. The blinds in the house were probably the same age and were still working fine right up until the day I had them replaced (taste, rather than necessity). Do you have a Phonewatch alarm or something?

Upforthematch

Ursus Horribilis wrote: »

I got rid of a 20+ year old wooden shed from the back garden last year. Replaced it with a steel one that I expect to last for quite a while. The blinds in the house were probably the same age and were still working fine right up until the day I had them replaced (taste, rather than necessity). Do you have a Phonewatch alarm or something?

As I said it depends. A steel shed will obviously last longer than a wooden one. I replaced a wooden shed that was rotten, I don't know how long the previous owner had it for but it didn't look 20 years old.

You mightnt have kids messing up your blinds. Blinds and curtains are expensive, why not include them.

These are costs of owning a house and no swimming pool or underground parking in sight.

A monitored alarm costs money. Your incredulity makes me wonder do you live in a place where alarms aren't a necessity?

Ursus Horribilis

I'm not going to get into a tit for tat and take the thread off-topic. Let's just say your house owning costs are clearly more than what mine are.

Upforthematch

Ursus Horribilis wrote: »

Let's just say your house owning costs are clearly more than what mine are.

And that's what the Op wants to find out more about...

I don't agree with the Op that renting is the better option but there can be lots of hidden costs to owning a house.

Servicing a septic tank or testing your own water supply for effluent could be another cost of owning a home in the country.

riclad

Maybe 5 per cent of house,s have management fees,
unless you buy a mansion with a large garden ,
all you need is a push lawnmower .
no need to hire gardeners .
if you buy a house in good nick, theres zero chance you ,ll need
roof repairs or replacement windows .
you can buy furniture from vincent de paul or ikea .
Or on adverts.ie for sale very cheap .
if you are willing to buy second hand furniture .
If you are single you can buy a small house, 1-2 bedroom,
bungalow, small house reduced maintenance , easy to decorate .
property tax depends on the value of the house .
in dublin rents are above the cost of a mortgage .
In most area,s .
you could buy a 2 bed house.
rent a room scheme, rent one room out to a work person.
like a nurse ,teacher
see revenue.ie , earn up to 14k, tax free .

sdraobs

sdraobs wrote: »

hi, im thinking of buying (currently renting) but from a pure economics view, trying to work out what costs i have that i wouldnt have if i was renting. As in not worried of the psychological benefits of owning over renting (security, noy worrying about being turfed out by landlord). is there any additional i am missing

1. mortgage repayments
2. property tax
3. management company fee (if applicable)
4. structural repairs (roof, windows,)
5. buildings insurance
6. redecoration after a few years - new carpets, new kitchen,
7. applicances (replace dishwasher/washing machine when they break)
8. furniture
8. Gardeners


Am i missing anything else? i am not including utilities, or tv licence as ill have to pay them anyway as a tenant.


Having read this list I'm thinking of staying renting. Whoever said renting was dead money is a clown.

Mortgage is paid off in time, usually well before retirement.
Not a huge expense, though benefits aren’t that clear.
Management fees don’t apply to all properties
Roofs, windows and central heating tend to be one offs, if even that
Building insurance applies to all properties and needn’t be too expensive. Shop around.
Decorate one room a year. Buy good quality carpets and they’ll last years.
Budget to replace one large item every other year.
Gardner’s? Do it yourself. Great exercise and very satisfying.

Imagine reaching retirement and not have to worry about paying rent!