The Student Room Group

Is renting a waste of money?

My mum was saying that I should try and buy a home as soon as possible, and minimise the amount of time I rent, because renting is a "waste of money" and after a month, all your money is gone.

I get what she is saying but obviously I'd want to wait and make sure I find the right home first. Renting doesn't sound as wasteful to me as my mum makes it out to be. If I budget £800-£900 on rent with bills included in the South East area, I'd still have plenty of income left to do whatever else I need to do.

Does anyone else think rent is waste of money? Or is it that bad? Now I feel like my mum is going to pressurise me to buy a home when I'm like 25...

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It’s an absolute waste if you can live at home. I have a sister who rents with her partner in a 2 bed flat and over the last two years has paid out over 30k which is enough for a deposit. If you can save at home so much the better. It what am having to do along with my partner we have the funds for a deposit and could easily afford to rent, but we are still with family while we wait due to his job contract. Once his job sorted we are going to buy but for now we are going to wait it out. Though we really want to be be living together. It is what it is
Reply 2
Original post by lozzielizzie
It’s an absolute waste if you can live at home. I have a sister who rents with her partner in a 2 bed flat and over the last two years has paid out over 30k which is enough for a deposit. If you can save at home so much the better. It what am having to do along with my partner we have the funds for a deposit and could easily afford to rent, but we are still with family while we wait due to his job contract. Once his job sorted we are going to buy but for now we are going to wait it out. Though we really want to be be living together. It is what it is


Rent in the long term most likely won't pay off, but if the housing market collapses like it has done in the past, people who have purchased homes with higher mortgages could prove to be more expensive in terms of cash flow in the short to medium term...

Also say you buy a cheapish home and pay it off as quickly as possible you may be better off than say someone who has 500k home in london...
Reply 3
I think overall renting has it's advantages: flexibility, limited responsibility e.g boiler maintenance etc as well as being an opportunity to establish/re-establish a solid credit rating, it also is drains a lot of your money, has some pretty serious disadvantages and overall in my opinion, should be avoided if at all possible by living with your parents for a little while longer so as to save up sufficient amounts to put down a deposit etc.
Yes, it’s a waste of money, but arguably anyone still living with their parents after the age of 20 is sad and hasn’t grown up yet imho. Plus not living with your parents is incredibly liberating.
The problem with renting is that the monthly repayments generally cost the same as (or more than) a mortgage, except that when you're paying off a mortgage, you're essentially paying for your own assets which you'll get to keep at the end.

With renting you're paying for somebody else's mortgage and you don't get to keep any of that money you're paying off, so in the long term it's nearly always better to have a mortgage unless you really need the flexibility.

Even in the worst-case scenario mentioned by the above poster, if the housing market collapses, and maybe your house loses 50% of its value, you're still better off than you would have been from renting - your house will never be worthless, whereas any money you pay to a landlord is money you'll never get back.
Reply 6
http://www.thisismoney.co.uk/money/mortgageshome/article-3458315/Number-young-adults-living-parents-hits-20-year-high-says-ONS.html


"Young adults are more likely to be living with their parents than at any other time in the past 20 years as record numbers struggle to fly the nest, official figures reveal. There are now 3.3million 20-34 year olds still living with parents, a 618,000 leap since 1996, the findings from the Office for National Statistics show. A fifth of 25-to-29 year olds still living with their parents, and half of those aged 20-to-24 and one in 10 aged 30-to-34 are also in the same boat."
Original post by ANM775
http://www.thisismoney.co.uk/money/mortgageshome/article-3458315/Number-young-adults-living-parents-hits-20-year-high-says-ONS.html


"Young adults are more likely to be living with their parents than at any other time in the past 20 years as record numbers struggle to fly the nest, official figures reveal. There are now 3.3million 20-34 year olds still living with parents, a 618,000 leap since 1996, the findings from the Office for National Statistics show. A fifth of 25-to-29 year olds still living with their parents, and half of those aged 20-to-24 and one in 10 aged 30-to-34 are also in the same boat."


I understand the economy isn’t the best at the moment but this figure shocked me. Unless you live in London cheap rent isn’t hard to find in most places in the UK
Original post by Mystelle
My mum was saying that I should try and buy a home as soon as possible, and minimise the amount of time I rent, because renting is a "waste of money" and after a month, all your money is gone.

I get what she is saying but obviously I'd want to wait and make sure I find the right home first. Renting doesn't sound as wasteful to me as my mum makes it out to be. If I budget £800-£900 on rent with bills included in the South East area, I'd still have plenty of income left to do whatever else I need to do.

Does anyone else think rent is waste of money? Or is it that bad? Now I feel like my mum is going to pressurise me to buy a home when I'm like 25...


It's dead money because you pay it each month and you're left with nothing for it at the end, whereas with buying a house you pay the mortgage each month and at the end you own the house. I wouldn't say it's necessarily a waste of money though, I'd rather spend the money on rent than move back in with my parents at the age of 22.
Reply 9
If it enables you to save money or time or increases your quality of life then why not.

Many people in my company rent because it means they're closer to work; they could buy but not necessarily in the area they currently live or want to live (we're talking London prices). The value you get from living where you want to be isn't wasted.

They could pay £1300 a month in mortgage payments (mind you, half of that is interest) for a 1 bed flat in Zone 5/6 or for the same amount rent a bedroom in Zone 2/3 with £600 to spare with bills paid and covered (which is the same as what you'd be contributing to the mortgage principle anyway). If you see value in having the extra space but have a longer commute, then buy. If you're content with less and prefer to save money (you could re-invest the £600/month and compound it) and enjoy a shorter commute or journey into town then maybe renting is better. Everyone places different weighting on different aspects of quality of live, there's no point looking at it solely from your own pair of shoes maybe it doesn't work for you but perhaps it does for others. That's it.

Expanding on the above, assuming you have a mortgage of £1300, you have to bear in mind this is based off current interest rates which are at historic lows. Should they rise back even a few percent (and it will) you'd be paying hundreds more in interest.
(edited 5 years ago)
Renting has its advantages i'e no real responsibility for the maintenance of the property which is very costly. I wouldn't rush into buying a house at 25. Do not burden yourself with such a big f:smile:inancial commitment. Enjoy your freedom while you can. Good luck
Original post by winterscoming


Even in the worst-case scenario mentioned by the above poster, if the housing market collapses, and maybe your house loses 50% of its value, you're still better off than you would have been from renting - your house will never be worthless, whereas any money you pay to a landlord is money you'll never get back.


Hmmm, housing market could crash 90%, the only thing is, in a property crash the economy is normally messed up... what about from a credit point of view, if you don't pay rent... is it worse than being repossessed on a property because u can't make the payments and go bankrupt...
Well most people don't have the money for a home and renting is like a way to go until you find your perfect home. (Also it is real risky buying a home since if you lost your job you it would be a lot harder finding one since you are limiting yourself to places nearby.)
Original post by ebam_uk
Hmmm, housing market could crash 90%, the only thing is, in a property crash the economy is normally messed up... what about from a credit point of view, if you don't pay rent... is it worse than being repossessed on a property because u can't make the payments and go bankrupt...

The chances of the housing market crashing by 90% or even 50% are virtually non-existent in the UK because there's a chronic shortage of housing which is going to take decades to fix. Making decisions based on absurdly unlikely outcomes is just silly anyway. in 2008, the worst recession in decades, the housing market dropped by around 25%, and a lot of people were plunged into negative equity, yet the only people who went bankrupt were the ones who were either already borrowing far beyond their means to repay, or they had taken a lot of irresponsible risks.

People who buy a sensible house which they can afford (e.g. on a standard 25 year or 30 year mortgage) are highly unlikely to ever go bankrupt through having a mortgage. There are also plenty of schemes for things like income protection for people who lose their job. In other words, buying a house in the UK where the price range is within your means to repay is just about the closest thing you can get to guaranteed financial stability and security.
Original post by Mystelle
My mum was saying that I should try and buy a home as soon as possible, and minimise the amount of time I rent, because renting is a "waste of money" and after a month, all your money is gone.

I get what she is saying but obviously I'd want to wait and make sure I find the right home first. Renting doesn't sound as wasteful to me as my mum makes it out to be. If I budget £800-£900 on rent with bills included in the South East area, I'd still have plenty of income left to do whatever else I need to do.

Does anyone else think rent is waste of money? Or is it that bad? Now I feel like my mum is going to pressurise me to buy a home when I'm like 25...


Like someone else said-
With renting the monthly repayments generally cost the same as (or more than) a mortgage, except that when you're paying off a mortgage, you're essentially paying for your own house/flat which you'll get to keep at the end.

With renting you're paying for somebody else's mortgage and you don't get to keep any of that money you're paying off, so in the long term it's nearly always better to have a mortgage unless you have a genuine reason, such as you want/need the flexibility.

You would obviously need a decent deposit for a mortgage. But if you can live at home for the time being, then you can save up more for a deposit.
Original post by Mystelle
My mum was saying that I should try and buy a home as soon as possible, and minimise the amount of time I rent, because renting is a "waste of money" and after a month, all your money is gone.

I get what she is saying but obviously I'd want to wait and make sure I find the right home first. Renting doesn't sound as wasteful to me as my mum makes it out to be. If I budget £800-£900 on rent with bills included in the South East area, I'd still have plenty of income left to do whatever else I need to do.

Does anyone else think rent is waste of money? Or is it that bad? Now I feel like my mum is going to pressurise me to buy a home when I'm like 25...


It is dead money and a total waste. Why pay hundreds a month to line someone's bank account when you could be paying the same (sometimes less!) to eventually own your own home and have an asset? If you can stay home and save, then do that! If you begin to rent, it will be almost impossible to save for a house deposit. People who rent find themselves having to go home to save for a deposit for a house and if they do not have the opportunity to live at home again, they will be stuck in rent. I know people who are in their late 50s and have never owned a home because they are stuck in renting. It is not about the cost now, but what will happen in years to come. You just need to save around £2k and then get £3k from the government with a help to buy ISA to pay for a house deposit, then your 'rent' will be paying towards ownership. Another part of renting is that you're often on 6 month leases and your landlord could chuck you out at any time so you're often moving from place to place and have no sense of security. People rent usually because they have left home young to leave a bad situation so if you can stay home and save, do that.
It is wiser to stay home and save a deposit otherwise there's a good chance you'll get stuck in rent. I know middle aged people who have never owned a home because they cannot afford to save for a deposit, but they're slogging their guts to pay rent to keep a roof over their heads. The economy has the most to do with it, it is not due to laziness. This generation want to move out and be independent, just as much as people wanted to back when the economy was better, but they can't. Everything is rising in cost, whilst wages stay low. You also don't know each and every situation people are in to make an ignorant assumption that all people over 20 with their parents (approximately 3 million people) are 'sad and haven't grown up'. Most of those people want to move out but can't.
Original post by hannxm
It is wiser to stay home and save a deposit otherwise there's a good chance you'll[url="https://www.theguardian.com/uk-news/2015/jul/23/generation-rent-locked-out-of-housing-market"] get stuck in rent.
I know middle aged people who have never owned a home because they cannot afford to save for a deposit, but they're slogging their guts to pay rent to keep a roof over their heads. The economy has the most to do with it, it is not due to laziness. This generation want to move out and be independent, just as much as people wanted to back when the economy was better, but they can't. Everything is rising in cost, whilst wages stay low. You also don't know each and every situation people are in to make an ignorant assumption that all people over 20 with their parents (approximately 3 million people) are 'sad and haven't grown up'. Most of those people want to move out but can't.

Perhaps I’m just fortunate to have low rent (£250pcm bills all inclusive) and relatively high income for my job (I can earn up to £2500 a month even doing HCA work) but maybe others aren’t as fortunate as I, especially up north where houses are cheaper. I could probably save up the deposit for a £75,000 flat in Lancashire within a year if I really wanted to and there are two bedrooms houses available cheaper than that
(edited 5 years ago)
You sound more fortunate than most.
Well, the bigger issue is not so much "getting the right home"; it is getting a mortgage. Since the sub-prime lending days, it is very difficult.

In short, I find your having this conversation premature.