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Bit of cognitive dissonance in your post. If housing is a bad investment (ie BTLs are no longer profitable with a mortgage), then why would you buy a house, it makes no difference whether it’s your own or someone else’s. Rent and divert the savings from mortgage principal and maintenance into another asset class.
That makes no sense.
You have to live somewhere.
You can either buy or rent and they cost about the same per month.
So you have to put, say, £1500 a month somewhere.
You can either put it into a mortgage where £150 goes to interest and £1350 is effectively saved.
Or you can put it to rent, where 0 is saved.BTL assumes you already have a property and you've got extra money hanging around that you can choose to either invest in a 2nd property or another asset class.
Sure, you can do BTL and get 5% return on it, or choose shares and get 7.5% return. But that's on property 2 onward. The same argument doesn't apply to your first property.(If you can convince me otherwise then I'm definitely all ears, since I'm completing on my house sale in 3 days and am about to rent for a short while.)
duncs-
If the cost of renting is roughly equivalent to the interest cost of borrowing 100% of the purchase price, plus the maintenance costs, of an equivalent property, then the argument put forward by @NickCJ is valid.
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I was going off the premise in the previous post that ‘BTLs are no longer profitable’. If that’s true (and it could be), it implies that the rent doesn’t compensate for interest, maintenance, insurance letting agents, stamp duty and so on.
In that case, renting would be a better choice than buying, setting aside the soft factors like security of tenure, decorating it how you want etc etc.
Mathematically it doesn’t make a difference whether it’s your first house or your tenth - the imputed rent versus return on capital discussion is the same.
ChasnotRobert
NickCJ
Bit of cognitive dissonance in your post. If housing is a bad investment (ie BTLs are no longer profitable with a mortgage), then why would you buy a house, it makes no difference whether it’s your own or someone else’s. Rent and divert the savings from mortgage principal and maintenance into another asset class.