To Rent or To Buy ?

[BENIDORM]

To rent or to buy is the question I've been asked many times over the years .

A new report in UK states that more people are renting their homes rather than buying them, which is not really surprising when it has been almost impossible to obtain a mortgage.

But what is the best way in Spain ?

Well I've always believed that it is better to rent first, for so many reasons, and of course it makes sense to check out the area and lifestyle first, Spanish living is not for everyone, and many have found that, to their detriment.

My parents owned their home and I was brought up to believe that to be a 'homeowner' was the best way, but now I'm not so sure, and that goes for owning a home anywhere.
We bought our first house when we were age 20 and had bought and sold 5 houses by the time we were 30, but it was dammed hard work and we did struggle at times to maintain our payments, and ok we were then in a position to pay cash for our sixth house,but was it really worth the hassle and stress ?

We did rent a house in Spain for a short while when we arrived in Spain, and yes I do believe that it was the best thing we did, and ok it was inconvenient having to store much of our furniture and yes it was quite stressful time , but still it was worth it for us.

But now that I'm retired I wonder if it would have been better to now have rented a home and then we would have been able to spend and enjoy the money that we've 'tied up' in a property.
Don't get me wrong , we are happy with our 'lot', but maybe it would have been better not to have the responsibility of being homeowners in Spain..
I know so many people, including Spanish, who are property rich and cash poor, and it really is compromising their lifestyles and for some even affecting their health.

So is renting the best method at the moment ?
I'm not sure that it is the best idea for a long term solution for younger people, but for anyone retiring I think it certainly has to be given serious thought.
I know plenty of older couples who, if they could sell their properties now, would certainly consider renting in Spain, rather than selling up and returning to UK...

Just my own thoughts, and I know everyone's circumstances are different...but what do you think ?

Regards,
Gordon..

[Jool]

Renting is good for the tenants but not too good for the property owner/landlord in Spain is my very short response! Having heard so many tales of problems and recent belgians and british in particular who have done the rounds of rented properties over here leaving a trail of damage and unpaid rents I would never rent a property out in Spain other than on a holiday let as it is fraught with problems.

[Julie]

Hi Benidorm

I agree that for older people renting would be a good idea, and as you say they could enjoy the retirement with the money, the only thing that makes me think twice is not being able to do what you want with the rental.

As Jool says, lots of people have bad tenants, but also lots of tenants have bad landlords, so you just have too be careful, as a landlord myself, my advice would be, if you can't afford to loose the rent, ie: you have a morgage you need to pay, then don't do it, but having said that, i think there are many more good tenants than bad ones, as there are also more good landlords than bad ones

[peteroldracer]

I have put my five penn'orth here before on this, but to repeat my views - for the vast majority of folk coming here to live, given that they are very likely to be pensioners or approaching that state, renting is the best option.
Let us say that it is a commited move, with any property in the UK being sold off. This could be a large sum, most of which would be swallowed up by purchasing a property here, which may or may not be in the right place/be the right size etc. for long-term needs. Should in the fullness of time one of the emigrants become in need of better social/health care than available from the state here (and I am thinking of debilitating illness, or dementia, or any of the other things that cannot be fixed by a quick operation or a few pills), or death of one partner, there may be the desire to return to the UK. In the majority of cases it seems to be taking years rather than weeks to sell a house here, even if it is totally legal, trapping them in Spain.
As one ages, the villa with pool and gardens becomes more and more difficult to manage, and can take over all one's lfe, and down-sizing or moving to an apartment is difficult due to the sales situation.
Alternatively, the cash sum can be used to buy some goodies such as a car suitable for Spain, and the rest invested. It may not make much, but property has looked to be a poor investment here for some time IMHO.
A UK pension of, say, 1500€ per month - could be much more for some - would allow rent of 600€ per month, which in today's market would get anything up to a 3-bed with pool casa, say 80€ per week = 175€ per month for food (for 2), 200€ p.m. for utilities, and 150€ for car expenses, adding up to 1125€ - leaving a buffer for entertainment of over 300€.
You can jiggle the figures to suit your own circumstances and aspirations, but the basics are there I think.
AND if necessary, you can walk away, losing at most a deposit and the odd bit of rent.
AND anything that needs fixing is the responsibility of the landlord.
AND you still have all that capital.

I rest my case.

And by the way, IMHO anyone coming to live in Spain expecting to be able to get a job and live as they do in the UK is a sandwich short of a realistic picnic.

[katy]

I think for people moving to Spain who don't know the areas very well it is better to rent for a while. Not only is buying and selling costly they may not be able to sell if they find out they have made the wrong choice. Secondly no-one knows what will happen to the spanish market over the next few years, possibility of further falls etc. I know someone who bought an apartment 18 months ago on the CDS because they thought it was a bargain, reduced from 200,000 to 145,000. These apartments are now selling for 120,000 and no buyers, so they would have been wise to wait.

I know someone who has been in the same rented property in Spain for 15 years. When they first rented they could have bought it for £40,000. They have been paying an average of £6000 pa. Do the math!

On the other hand I know a couple who are comfortably off, in their 60's they live in a £800,000 house in the UK. Over the last 5 years she inherited two houses worth together around £700,000. They don't have any children and nearest family is 2 nieces who they never see. They do go on exotic holidays but overall they are quite careful with money. eg. changing power co's to save about £20 per year In their position I would sell up and renst in Barbados or something, live it up a bit

So, mixed feelings really. I would always want to own a property somewhere.

[BENIDORM]

Hello Jool and Julie,
Yes I do agree that for landlords, renting property can be frought with problems, however there are many good tenants, shame that you only ever hear stories about the bad ones.
I've also been a landlord and to be honest the older tenants very rarely presented any problems, perhaps a little finnicky about minor defects, but in general always paid on time and kept everything clean and tidy...

I do know of an older British couple who sold their house in Spain about 6 months ago and are now very happily renting, they paid a full years rent upfront and pay 6 months rent in advance after the initial year, so their landlord was a very happy bunny

Me ..well today I'd probably be happy to rent a property...but by tomorrow I'd probably have changed my mind and want to be a houseowner...but that's probably just a 'Codger' moment....

Regards,
Gordon.confused.com

Katy and Peter....Good points !...

[Devils Advocate]

If we are talking now,ie right now I honestly feel (talking about Spain) it is a no brainer to BUY!!

The prices for some top notch houses is now simply stunning and irrespective of scare mongering doubt it will ever be as low again.

We've phoned up for 2 recently which looked simply awsome for the price.........both sold .............I think a property boom over there is slowly coming to the boil...although don't all laugh at once

[katy]

Sales in Spain were down 28% last month....a watched kettle never boils

[Devils Advocate]

Hmm, I've just read they were 17.6 % up ..although prices are still falling.

[frank]

[quote="Devils Advocate"]If we are talking now,ie right now I honestly feel (talking about Spain) it is a no brainer to BUY!!
The prices for some top notch houses is now simply stunning and irrespective of scare mongering doubt it will ever be as low again.
We've phoned up for 2 recently which looked simply awsome for the price.........both sold .............I think a property boom over there is slowly coming to the boil...although don't all laugh at once [/quote]
Might be a good time for Brits to buy, but just reading one in every three unemployed in Europe lives in Spain, and Euribor has just gone up, making mortgages more expensive. We can all make a guesstimate about what might or might not happen, but I can't really see prices generally taking off in Spain for some time yet, I fear there is still more grief to come. You'll always get the sensibly priced properties selling, especially in tourist areas, some will be desperate to offload, but the majority still seem to asking silly prices.

[katy]

Hmm, I've just read they were 17.6 % up ..although prices are still falling.

Do keep up

5 obstacles standing in the way of a recovery

Posted on May 29, 2011 by Mark
Filed Under Property market | Leave a Comment

With house sales down 28pc last month compared to March, what is standing in the way of a recovery? The financial news site Cotizalia.com listed 5 big reasons in a recent article

[Devils Advocate]

http://en.blog.vapf.com/financial-news/ ... using/1119

The bloody liars

[katy]

Difficult to tell as Spain is not very transparent. No way of knowing what a property actually sold for. Sales figures from INE contain, inheritances, bank foreclosures, gifts etc. Prices haven't dropped much in the areas I know. Some advertise as "reduced by 190,000" and they are still not worth what they are asking.

[BENIDORM]

Well I suppose now really is a good time to buy a bargain property in Spain and there are some genuine bargains available, although as previously pointed out, many reduced properties are still overpriced.
However after discussing the '' Is it better for retired people to rent , rather than buy'' issue, many of my friends do think that it would have been better to have rented on a long term basis, and then had the freedom to spend their money.
I'm still not sure...

One question that we discussed was ''Are there council houses in Spain '' ?, and I don't know, are there any form of social housing in Spain ?. I've never come across them..

Regards,
Gordon.

[peteroldracer]

Just a couple of "points arising" - there are some social housing schemes, with many developments only getting licences etc. on the condition that so many are made available to young and/or low-income tenants, but these would in reality only be for Spanish, or the odd nominal foreigner who had paid in to social security for some time (in reality I don't ever see this happening unless political correctness creeps in!).
A further consideration on the rent/buy quandry is the cost and effort of exterior painting of a house every cpouple of years - ours cost well over 1000€, and that was using Coviran Pro paint and applied at "mates' rates". Most rental agreements would not put that on the tenant I believe?

[Lyric]

Just up the road from my Frigiliana apartment there is an apartment development that was "Council Flats".
There was a lottery for an allocation. All local occupants, one of the local Police has one, even though he has a campo house rented at 800 a week ! I wonder how that works ?

[Julie]

In the UK by law, it is the landlords responsibility to maintain the exterior walls of the property, as well as windows, roofs etc.
When I decide what rent to charge, I factor in maintainence, loss of rent, repairs etc.

[katy]

No council houses as in the UK. They are called VPO. When some become available the list is always over-subscribed. eg. 25 houses has a 500 person waiting list. Explanation here.

http://news.kyero.com/2008/05/29/unsold ... l-housing/

[frank]

[quote="Lyric"]Just up the road from my Frigiliana apartment there is an apartment development that was "Council Flats".
There was a lottery for an allocation. All local occupants, one of the local Police has one, even though he has a campo house rented at 800 a week ! I wonder how that works ? [/quote]
And Miguel, the big waiter, that worked at Sacristan, then drove a bus, and I see is now back working at Sacristan!

[julian]

interesting train of thought !