Why Buying a House Can Save You Over a Million Pounds

A look at the relative value of renting and buying in the short-term and the long-term. Also, other factors to consider.

00:00 Intro
00:23 Cost of Buying
2:35 Cost of Renting
4:04 Renting Long-term
6:34 Outlook for Renting UK
8:42 Other Pros and Cons

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ABOUT
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[axhamilton]

Always great content. Really pleased you've now gone for thumbnail cam alongside slides. The slides and charts are always excellent and my only complaint was how brief some were shown due to cutting back to talking head.

Keep doing what you're doing
Thanks

[Helen_white]

I'm in Michigan, and the housing market here over the past 7-8 years has been unprecedented. Houses that were purchased for $130K in 2015 are now going for $590K. These are tiny, poorly constructed 950-square-foot homes in quiet, mediocre neighborhoods. Meanwhile, nicer, average-sized homes in better neighborhoods that were over $300K a decade ago are now selling for $750K+. It's wild.

[wisewolf]

I'm staying renting even though I could buy my own house... why? Because my landlord never increases my rent, it's £500 per month fully furnished, not far from Sheffield either so pretty good location. The money I've saved is now invested and earning me a nice 2nd income. The reason they don't raise the rent is because they own every property that's rented out (they have about 70 properties) and they prefer to hang on to good tenants for the long term. One bad tenant can cost a huge amount of money/stress. I realise I'm pretty lucky here... and if my rent was going up every year then yeah I wud probs buy something

[gavjlewis]

You missed one advantage of renting. If your relationship breaksdowns she can't take half your house.

[philipjamesparsons]

I thought the comments about paying off the mortgage rather than paying into a pension or investing it were interesting. If you do run the numbers, the tax efficiency of a pension will serve you better than paying off the mortgage ASAP. Especially if you are paying any higher rate tax. Investing in index tracker funds in a pension or ISA, based on historical performance will likely more than offset the mortgage interest. Especially when the compounding effect is taken into account. You will have to ride the stock market roller coaster though. So, basically, sensibly invested money is likely to produce better results than paying off the mortgage.

[Definetly_not_a_BOT]

We kept working remotely for the UK while moving abroad where it is cheaper to live. Win win 🖐️

[patriciawaplington]

Thank you so much for this, it’s helpful for young people wondering what to do.

[xParesh]

I borrowed less than I could and took on a lodger so with overpayments so 6yrs in I'm half way being away from being mortgage free and will still have another 20yrs of peak earning power before retirement so I'll have an enormous amount of disposable income for that period. I think too many people borrow too much for a property they don't need. If you borrow just what you need then its possible to clear your mortgage in half the time, saving an enormous amount of interest and opens up financial freedom options earlier.

[brucelee]

Good Illustration, practical. Thanks!

[ilikeboringthings]

But there is opportunity costs associated with buying a house....investing deposit, buying and maintenance costs into equities, being able to move easily for a better paying job etc. Also, folk tend to move more than once and spend big on home decoration/remodelling, these are other hidden costs. It's a more complicated picture.than you present here.

[Tierneyboi]

Always enjoy your content but you’ve missed out the associated opportunity costs of buying i.e. you could have invested your deposit and maintenance/renovation costs into other assets such as an index fund. This changes the numbers substantially! In the very long term, on average you would expect the costs of renting and buying to be comparable to one another

[lh]

I always looked at it in long term as a percentage of your income. As your income goes up over time you pay less of that as a % to your mortgage but rent you seem to be paying the same % or slightly more year over year

[lenco]

A property is actually a liability rather than an asset.

[murunbuch]

Great video, but you have missed out an upside of renting. Take the £20, 000 deposit, upfront £6000 housing cost, plus the initial difference in mortgage payments vs rent, plus the yearly maintenance costs, and put all of that into a stocks and shares ISA over the same 50 year period. Now what's the difference in the final amount?

[SamJenkinsStephenson]

Another point to add with pros of house buying : Valuation of property increases with inflation if reasonably maintained during remortgage can reduce LTV significantly thus reducing interest payments in long term

[atilla]

Wait for the a.i. crash in 10 yrs and see people starting reduce in numbers since low birthrate (unless boats will be constantly scheduled😅)

[jsward]

8:49 "buying a house is a torturously long process"
That's what my family told me before I put in an offer for my condo here in the states (we left the UK around 20 years ago). We were all surprised by how soon the close date was when the seller accepted.

[Rahul-oybp]

1. If renters are investing money in Equity asset class that grows at 12%. A house price grows at 3%, and mortgage payments 4% makes -1% appreciation. At 12% returns over 30 years compared to buying house with 3% returns. Just the initial £50k invested at 12% compounding returns 30 years gives £1.5 mil and 50 years its £14.5 mil. Rent vs Buy, I would say don't place everything in one asset class. All money in a house and some issue with it will cause disaster and same with equity.

[stephen]

In my working life time, roughly 40 years, the cost of renting has increased ten-fold. I therefore submit that it is likely the same will be true over the coming 40 years.

[bluegoose]

not to mention that there are some areas where landlords increased rent by over 10% for a couple of years... I had a colleague who is in their 30s who had to quit her job, move back in with parents down south because rent in the part of Manchester she lived in went up 10% two years in a row, while her wage only went up 2% per year.

I'm not sure if that was legal to increase rent by THAT much, but it happened. This was in 2022.