We pay 1450 for a two bed and the quote on a similar two bed comes to about 1260 a month with ten percent down. Right now the landlord fixes everything and we have never spent a penny on the building itself. We plan to stay at least five years and both incomes are stable. The number looks obvious and that is exactly why I do not trust it.
The mortgage payment is not the cost of owning, it is one line of it. Add buildings insurance, property tax or council tax if it changes, service charge and ground rent if it is a flat, and a maintenance allowance, where the figure people usually quote is around one percent of the property value a year. Then take your buying and selling costs and divide them by the number of years you actually stay, which is the line that sinks most short holds. Do that and your 190 gap will shrink, but over five years it very often survives.
And it is not a smooth one percent. It is nothing for three years and then a boiler and a roof in the same autumn, which is why the buffer matters more than the average.
The transaction costs divided by years held is the framing I was missing. At five years it is survivable, at two it clearly is not.
Compare rent against interest plus maintenance plus insurance plus tax. The principal part of the payment is not a cost, it is savings you are forced to make. People who skip that step conclude renting always wins and people who ignore the rest conclude buying always wins.
This is the line that ends most of these arguments. The throwing money away camp and the renting is smarter camp are usually both comparing the wrong two numbers.
Splitting the payment into interest and principal in my sheet moved the answer more than any of the other costs did.
Mild disagreement with the caution in this thread. Everyone lists ownership costs as if rent were fixed forever, and it is not, and in most places it has moved more than maintenance has. If you are staying five years with stable incomes, the risk of your rent rising is a bigger unknown than the risk of your boiler dying.
I bought with almost nothing left after the deposit and the boiler failed in month three, which turned a cheap month into a horrible year. Whatever the gap is, do not spend it in advance. Keep three to six months of the full payment plus a repair fund and the whole thing stops being frightening.
One thing worth paying for once is an hour with someone who does this for a living and is not selling you the mortgage, because the fees, tax treatment and stamp duty style costs are all local and get out of date fast. The rest of the modelling you can do yourself in an afternoon.
@coast_fi_casey · 2w ago
I rented the same flat for six years then bought two streets away, so I have both sets of numbers in one spreadsheet. Years one and two cost me clearly more than renting once fees, a new consumer unit and a washing machine were in. It crossed over somewhere in year four and by year six it was not close, mostly because the rent on my old flat went up twice while my payment did not. Five years is roughly where this stops being a gamble in my experience.
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