# Renting or buying....again



## Ifn (Jan 29, 2017)

I know this has been discussed before but it keeps coming up in my mind. I’m older, 70, and I rent in Madrid. I had every intention when I came here a year and a half ago, of buying a place. It’s how I lived in NY. But then I read about all the added taxes and fees.
There are added cost in NY too like high maintenance fees..I’m talking apartments, not homes . But as I read stuff here I thought it would be wiser to rent. I’m older, there are more taxes here, I think....I’m not actually sure. Renting seems very precarious to me. I have a nice landlord but I was thinking of moving. I pay a lot of rent and while I do have a lot of space, the way it’s laid out, is not useful for me, I’m an artist and I wanted a bedroom to be my studio. But the second bedroom is the size of a nursery. 
I should add that the issue of inheritance, of leaving something for someone else, is not a factor for me. Nor is having a mortgage. I would prefer to pay outright.
But for those of you who did buy apartments and homes, could you describe what the pros and cons are? Gracias.


----------



## NickZ (Jun 26, 2009)

If you're coming from the US I'm a little surprised you find things like property taxes high. 

The main advantage of renting is you can use the purchase money for something else. Invest it. Travel with it. You also aren't tied down. If in five years you feel you want to be elsewhere off you go.

The main advantage is if you buy you can within limits do whatever you want. You don't need to worry about rent increases. 

Not to be morbid but at 70 you're old enough you aren't planning for the next fifty years. You need to consider what your health might be like in five or ten years. Will you want a smaller place easier to look after? Or closer to the shops? Renting will make it easier to adjust your lifestyle to whatever changes come along


----------



## Ifn (Jan 29, 2017)

NickZ said:


> If you're coming from the US I'm a little surprised you find things like property taxes high.
> 
> The main advantage of renting is you can use the purchase money for something else. Invest it. Travel with it. You also aren't tied down. If in five years you feel you want to be elsewhere off you go.
> 
> ...


Thanks Nick. In NYC, I always lived in Co-ops, where the maintenance fee covered all the taxes, most of which were paid by the Co-op itself. Plus there were certain tax write offs in NY. So I’m not used to paying yearly property taxes. 
I’m good at choosing apartments that fit future needs...like elevators, transportation and shops (as well as cafes) are a must!
It isn’t that I want a large place. I just want 2 bedrooms where I can use one as my art studio. Currently, in my more spacious apartment, I’ve had to spread my work areas into the living room and dining room.
And I hate moving. And as I said I hate the insecurity of having a landlord. 
So my question was not so much about the cost of an apartment but about the other yearly costs and taxes.


----------



## Lynn R (Feb 21, 2014)

I chose to buy rather than rent in Spain - twice (originally bought a house then sold it 13 years later and bought an apartment). It is certainly expensive in terms of taxes and fees to buy and sell property here, but I looked at it in terms of the total outlay including the purchase price of the property, taxes and fees gets me a better property than I could get for the same amount in my home country (the UK).

My annual outgoings in terms of taxes and fees are not huge. My IBI bill (annual property tax) is €447 for the year and the monthly community fees are €40.

I want to own both for security and the feeling of being settled (have had friends who have rented and have had to move a few times due to either landlords giving them notice or problems in getting the landlord to address repairs - which an owner can just sort out themselves, although they do of course have to pay for them). I also have a wider choice of properties when looking for somewhere to live as the number of properties on the market for sale here is much, much bigger than the number advertised for long term rent. I did look serioiusly at rental properties when we had sold our house but did not see one that I would really have liked to live in, although no doubt the pool of rental properties available in Madrid is much bigger than it is here. 

Although I cannot say that owning property here is a good investment in the financial sense, it is a better investment in my opinion than paying rent, where you get back exactly nothing from the money you have paid.


----------



## Ifn (Jan 29, 2017)

Lynn R said:


> I chose to buy rather than rent in Spain - twice (originally bought a house then sold it 13 years later and bought an apartment). It is certainly expensive in terms of taxes and fees to buy and sell property here, but I looked at it in terms of the total outlay including the purchase price of the property, taxes and fees gets me a better property than I could get for the same amount in my home country (the UK).
> 
> My annual outgoings in terms of taxes and fees are not huge. My IBI bill (annual property tax) is €447 for the year and the monthly community fees are €40.
> 
> ...


Thanks Lynn. You make some good points. While I’m not looking for an investment. You never know. 
Feeling secure about my living arrangement is important to me.


----------



## mrypg9 (Apr 26, 2008)

I owned properties all my life until I left the UK fifteen years ago, first for Prague, then for Spain. I was a landlord in the UK and Canada. I sold the lot and invested the proceeds. This supplements my retirement pension income.
We decided to rent and lived in big houses with pools and extensive gardens, houses we neither wished to or could really afford to buy. Last year after forty happy years together my partner died and I didn't want to go on living in the spacious four bedroomed villa we had lived in for ten years. Within a week of deciding to move I had found the ideal place for me, a typical Spanish finca in rural surroundings but near a town. Houses of the kind I moved out of are often on the market for a very long time as some are near or over the seven figure price range, hugely overpriced, Spanish owned.
I'm your age or near about. Not n the best of health currently, in fact having a pacemaker installed tomorrow. I have one son who doesn't need any inheritance and certainly not another house in Spain as he has properties here and elsewhere. So it's me I have to think about.
Maybe if I live another ten years I'll need to move to a smaller apartment in town. No problem there.
I have a five year rental contract on my finca but the owners are good friends so I have security.

People will say that by renting you put money into a landlord's pocket. If you need a mortgage to buy you are putting money into the bank's coffers. All of the three landlords we've had here and in our three years in Prague were good honest people so I was happy to give them the income.

Looking back, I think I would not have got into property like I did. I would have rented and invested in something productive. One cause of the UK's economic sluggishness is our obsession with property so that money that could be put to use in investing in the productive side of the economy goes instead to the financial side, adding to our high level of personal debt.
That's my tuppenceworth on the subject.


----------



## ccm47 (Oct 15, 2013)

Lynn R said:


> Although I cannot say that owning property here is a good investment in the financial sense, it is a better investment in my opinion than paying rent, where you get back exactly nothing from the money you have paid.


Equally if you rent you pay the market value for a property, or move out, which is what some of our Spanish friends did when rents for our area dropped. The property they left has now stood empty for over 4 years despite it being an architect designed and owned eco-friendly house with sea glimpses.

We, on the other hand, now have negative equity on our mortgage-free property. Our 2 bed garden flat with underground parking and communal pool probably costs about 1800 euros a year for 2 people with all bills paid.


----------



## Lynn R (Feb 21, 2014)

mrypg9 said:


> People will say that by renting you put money into a landlord's pocket. If you need a mortgage to buy you are putting money into the bank's coffers.


True. But if you buy a property with a mortgage over 25 years, say, at the end of that time the property is yours, albeit you have paid the bank over and above the price of the property. You can then, if you wish, sell that asset.

If you rent for 25 years at the end of that time the property will still belong to someone else and you can recoup none of the rent you have paid.

The OP doesn't plan to get a mortgage, anyway.

Good luck tomorrow, I hope the pacemaker does the trick.:fingerscrossed:


----------



## Lynn R (Feb 21, 2014)

ccm47 said:


> Equally if you rent you pay the market value for a property, or move out, which is what some of our Spanish friends did when rents for our area dropped. The property they left has now stood empty for over 4 years despite it being an architect designed and owned eco-friendly house with sea glimpses.
> 
> We, on the other hand, now have negative equity on our mortgage-free property. Our 2 bed garden flat with underground parking and communal pool probably costs about 1800 euros a year for 2 people with all bills paid.


I don't quite understand how you can have negative equity on a mortgage-free property. Doesn't negative equity mean that the value of the property is less than someone borrowed to pay for it? When I sold my original house, I didn't recoup the cost of the transfer tax, etc. although I did get back the original purchase price. Had I rented the house for that period, I would have got back nothing at all.

We rent out our parking space (as we don't have a car) which more than pays for our monthly community fees. In fact it covers our water bills, too.


----------



## Alcalaina (Aug 6, 2010)

Average rents have gone up *50% in five years*.

https://elpais.com/economia/2019/08/01/actualidad/1564652435_118589.html

Of course this is not across the board, and there are still places where you can rent cheaply, but it would certainly help me make my mind up if I had to decide whether to rent or buy.


----------



## blondebob (Aug 16, 2019)

In my opinion It all comes down to personal preference and individual circumstance but I would far rather give the income to the bank and as in my case watch my property increase in value year after year than line some private landlords pocket how ever lovely they may be. After selling my property in Chiswick in 2009 having paid off the 15yr mortgage in 1998 the profit enabled me to buy an apartment in kingston u Thames and my property here outright with enough over to enable me to live a comfortable life here in Spain. So in my opinion my 15 yrs lining the banks coffers with mortgage payments V handing that income over in rent = No Contest


----------



## ccm47 (Oct 15, 2013)

I apologise if "negative equity" is not the correct term for losing money on the initial sale price, whether or not one still has a mortgage. The same is true for all of the early 2000 new builds in our area of Murcia. 
At one stage we had negative equity in the traditional sense quoted, but then we cleared the small mortgage and were left with an asset which suits our needs but which could notr be sold for anything like the price on the sales contract. Add that to the sum to be retained by the Spanish govt in case we aren't up to date with our taxes and we might just get 40% of the original price paid.


----------



## Lynn R (Feb 21, 2014)

Alcalaina said:


> Average rents have gone up *50% in five years*.
> 
> https://elpais.com/economia/2019/08/01/actualidad/1564652435_118589.html
> 
> Of course this is not across the board, and there are still places where you can rent cheaply, but it would certainly help me make my mind up if I had to decide whether to rent or buy.


Yes, good point. With a home which is bought and paid for, when one of us dies the surviving spouse will not have to worry about finding the rent (or funding increases) out of a single income. In Andalucia at least, inheritance tax between spouses on the family home is no longer a worry.


----------



## NickZ (Jun 26, 2009)

Lynn R said:


> True. But if you buy a property with a mortgage over 25 years, say, at the end of that time the property is yours, albeit you have paid the bank over and above the price of the property. You can then, if you wish, sell that asset.
> 
> If you rent for 25 years at the end of that time the property will still belong to someone else and you can recoup none of the rent you have paid.
> 
> :


If you buy you need to take a chunk of money and tie it up. Nothing stops you from taking that same down payment and investing it in something else.

The problem with treating a home has an investment is most of us buy for other reasons. People buy to be near work. Or near family. Worse few people can afford to buy more than one house. That means if things go badly you're in trouble.

Worse it's hard to sell 5% of a house if you need money. 

I'm not suggesting the OP do either. I actually think with what the OP has mentioned that buying a three bedroom. Knocking out a wall to merge two bedrooms might be the best option. But at the OP's age thinking of a house like an investment can end really badly.


----------



## Lynn R (Feb 21, 2014)

NickZ said:


> I'm not suggesting the OP do either. I actually think with what the OP has mentioned that buying a three bedroom. Knocking out a wall to merge two bedrooms might be the best option. But at the OP's age thinking of a house like an investment can end really badly.


In terms of being able to find what they want, I agree with you. In my experience of looking at apartments it is very difficult to find a two-bedroom one where both rooms are of a good size.

However, for anyone who is concerned about the investment aspect, wouldn't changing a 3-bedroom into a 2-bedroom devalue the property immediately? 

If you buy a 3 bedroom you are more likely to get two decent sized bedrooms and one small one, I would have thought.


----------



## NickZ (Jun 26, 2009)

I'm sure you're right and knocking down the wall would hurt the resale. But if it's a non loading bearing wall both knocking it down and putting it back up shouldn't be that hard.

I'm just thinking if the OP wants a studio they have two choices.

Create one

Or buy something with a large outdoor terrace and setup in good weather outdoors.


----------



## Megsmum (Sep 9, 2012)

At 55 yes old we 

Sold in the U.K. 
Bought at a third of the price in Spain
Banked difference as contingency and living expenses
Had a small pension 

Roll forward five years 

Still have property 
Less money in contingency but that’s normal
Pension increasing by a whopping £5 a year!

Looking forward 

Aged 66

Still have house... could sell and even at half the price we bought it still have sufficient funds to buy a small house in the village or rent into our dotage! Buying a home is just that a HOME not an investment, and it’s the buying for investment that created the last recession starting in the subprime market in the USA 
State pension kicks in... we have the full state each
Nursing pension might be worth another £10 a year by then!

Mary’s point, IMHO, about paying banks re mortgages is valid to a point. Personally 
I would not move to another country, especially nearing a particular age if I required a r mortgage. However, renting in the U.K. is ridiculously expensive in fact it’s more expensive than putting money into the hands of bankers and at least you have security and something to sell. My daughter rents a two bed in hove costing £1300 a month. It’s a tiny 2 bedroom flat, totalling off topic I know, but there’s pros and cons to both but I wouldn’t rent anywhere until I was older and could use the money from the house to use t have a decent standard of living


----------



## mrypg9 (Apr 26, 2008)

Lynn R said:


> True. But if you buy a property with a mortgage over 25 years, say, at the end of that time the property is yours, albeit you have paid the bank over and above the price of the property. You can then, if you wish, sell that asset.
> 
> If you rent for 25 years at the end of that time the property will still belong to someone else and you can recoup none of the rent you have paid.
> 
> ...


That's assuming that house prices haven't dropped dramatically and inflation hasn't depreciated your asset. I guess it depends if you're in it for the long term. I lived in my UK property for almost twenty-five years.

Thanks for the kind thought Hope all is well with you too.


----------



## mrypg9 (Apr 26, 2008)

blondebob said:


> In my opinion It all comes down to personal preference and individual circumstance but I would far rather give the income to the bank and as in my case watch my property increase in value year after year than line some private landlords pocket how ever lovely they may be. After selling my property in Chiswick in 2009 having paid off the 15yr mortgage in 1998 the profit enabled me to buy an apartment in kingston u Thames and my property here outright with enough over to enable me to live a comfortable life here in Spain. So in my opinion my 15 yrs lining the banks coffers with mortgage payments V handing that income over in rent = No Contest


Never had a mortgage, always able to buy cash apart from having a temporary overdraft to put down a securing deposit on a Canadian property until the balance was released from my savings accounts . I bought old run down properties very cheaply and renovated as and when I had the means to do so, helped by my son who is doing the same in rural France. I knew what I was doing when I bought him a set of Black an Dekker power tools for his fifteenth birthday and made him do small repair jobs for his pocket money.
I have a horror of debt of any kind including credit card debt. Inherited from my grandmother probably. She used to send me to the village shops when I was a kid and would send me back if she had left me a halfpenny short to pay the 'debt'. The money saved from not having to pay a mortgage each month was invested in my partner's business which we sold with the other properties. I felt vaguely insecure for a short while when we first rented but soon got over it.

The first year of renting here in Spain the monthly rent was 2300 euros. By the second year it was 1500, the third year 1000 euros a month for a detached unfurnished house on a double plot with pool in an allegedly 'good' area.
The reason for this: I reckoned that if we paid the rent in six-monthly chunks, kept the house in good order and with a reduced rent agreed to do minor repairs any sensible landlord would realise we were gold star tenants. That's how I proceeded when I was a landlord. I did what it took to keep good tenants.
Our Austrian landlord, a puti club owner in Austria where he lives, had had bad experiences with previous tenants. He had bought the house over thirty years ago cash and was more concerned with having a quiet life than raking in the dosh.
People didn't believe that we were paying such a low rent in an area where 3000 euros plus monthly for long term rentals were the norm. But we did.
I'm now living in a finca, same rent, all included apart from logs for my wood burner. The parcela has orange, lemon, fig, avocado, tomatoes, aubergines, peppers, onions etc. etc. plus eggs from the eight chickens.
I appreciate that not everyone is that lucky and yes, you are one hundred per cent right, it's all down to individual preferences and circumstances.
But as I said, the urge to be a home owner seems for some reason to be stronger in the UK than in some parts of mainland Europe although it seems to be catching on.


----------



## mrypg9 (Apr 26, 2008)

Alcalaina said:


> Average rents have gone up *50% in five years*.
> 
> https://elpais.com/economia/2019/08/01/actualidad/1564652435_118589.html
> 
> Of course this is not across the board, and there are still places where you can rent cheaply, but it would certainly help me make my mind up if I had to decide whether to rent or buy.


My rent actually decreased by over 50% in two years and stayed at that level for eight years. Luck of the draw I guess.

I found sound new tenants for my landlord, they moved in the day I moved out, saved him a chunk of cash going via an agency. 
He put the rent up by 1000 euros to 2000 a month.


----------



## Megsmum (Sep 9, 2012)

mrypg9 said:


> Never had a mortgage, always able to buy cash apart from having a temporary overdraft to put down a securing deposit on a Canadian property until the balance was released from my savings accounts . I bought old run down properties very cheaply and renovated as and when I had the means to do so, helped by my son who is doing the same in rural France. I knew what I was doing when I bought him a set of Black an Dekker power tools for his fifteenth birthday and made him do small repair jobs for his pocket money.
> I have a horror of debt of any kind including credit card debt. Inherited from my grandmother probably. She used to send me to the village shops when I was a kid and would send me back if she had left me a halfpenny short to pay the 'debt'. The money saved from not having to pay a mortgage each month was invested in my partner's business which we sold with the other properties. I felt vaguely insecure for a short while when we first rented but soon got over it.
> 
> The first year of renting here in Spain the monthly rent was 2300 euros. By the second year it was 1500, the third year 1000 euros a month for a detached unfurnished house on a double plot with pool in an allegedly 'good' area.
> ...


Being able to buy a property with cash anywhere in the world is really the exception to the rule. I have no idea about renting in the rest of the world but in the U.K. it needs better legislation etc. Families can rarely get rental terms of longer than 6 Months, how can a young family lay down any roots not knowing if their contract will be terminated. Post six months many landlords then do a rolling monthly contract. Landlords won’t allow people to decorate their homes or put up pictures etc. Both my daughters have rented in the south east since they left home. Both have suffered at the hands of bad landlords, lack of repairs, stupid letting agents, no real recourse apart from hefty legal costs. 

That’s why people buy, they want control and the ability to put down roots. Both my daughters earn very good money, but when you are paying out £1300+ a month it’s Impossible to save 40/50k€ deposits for a mortgage. My daughters only hope of buying a home and being settled is to wait until we snuff it


----------



## blondebob (Aug 16, 2019)

Megsmum said:


> Being able to buy a property with cash anywhere in the world is really the exception to the rule. I have no idea about renting in the rest of the world but in the U.K. it needs better legislation etc. Families can rarely get rental terms of longer than 6 Months, how can a young family lay down any roots not knowing if their contract will be terminated. Post six months many landlords then do a rolling monthly contract. Landlords won’t allow people to decorate their homes or put up pictures etc. Both my daughters have rented in the south east since they left home. Both have suffered at the hands of bad landlords, lack of repairs, stupid letting agents, no real recourse apart from hefty legal costs.
> 
> That’s why people buy, they want control and the ability to put down roots. Both my daughters earn very good money, but when you are paying out £1300+ a month it’s Impossible to save 40/50k€ deposits for a mortgage. My daughters only hope of buying a home and being settled is to wait until we snuff it


Spot on. Yes it really is a big problem for first time buyers, especially in the area you mention which is out of reach for the majority of first time buyers. Cash buyers are in the minority and in most cases are either as you inferred have inherited from a family bereavement. If you are earning less than 100k + per annum it would be virtually impossible to save for a deposit and pay the high rents and living costs in S.East and many other areas of the U.K. 
As I had planned to live here full time I was toying with the idea of renting my Apartment in Kingston u Thames out as it ideal for the University which has many overseas students whose parents have deep pockets. Decided against becoming a landlord but even back 2 yrs ago similar in my area were renting for £2,800 a month upwards. Its all madness but people are paying it. In my building I guestimate by chatting to the security people that the split is near 50-50 in owner/renters .......renters seem to be alot younger than the ones who own.


----------



## mrypg9 (Apr 26, 2008)

Megsmum said:


> Being able to buy a property with cash anywhere in the world is really the exception to the rule. I have no idea about renting in the rest of the world but in the U.K. it needs better legislation etc. Families can rarely get rental terms of longer than 6 Months, how can a young family lay down any roots not knowing if their contract will be terminated. Post six months many landlords then do a rolling monthly contract. Landlords won’t allow people to decorate their homes or put up pictures etc. Both my daughters have rented in the south east since they left home. Both have suffered at the hands of bad landlords, lack of repairs, stupid letting agents, no real recourse apart from hefty legal costs.
> 
> That’s why people buy, they want control and the ability to put down roots. Both my daughters earn very good money, but when you are paying out £1300+ a month it’s Impossible to save 40/50k€ deposits for a mortgage. My daughters only hope of buying a home and being settled is to wait until we snuff it


I got involved in buying old properties and doing them up for sale nearly forty years ago!!! My cottage, detached, flint, built in 1760 or thereabouts, cost me £5000 in 1978.. Way back then the local authorities gave you a grant for refurbishing old properties. You could rent them but couldn't sell for five years. I never paid more than £10k for a property apart from the one in Canada and that was about £50k sterling. I got a tenant as soon as I bought it as the property, in an old woollen mill, came with a guest apartment owners could apply to use.

I know this was long ago and things have changed. I didn't make £millions out of the five properties I bought and sold, just a reasonable profit. I know it's a lot harder nowadays for young people to get on the property ladder.

I'm not au fait with current UK rental laws but it seems there is an urgent need for secure long-term contracts with rent controls.
That won't come from Johnson.

My current contract here in Spain is for five years renewable. My previous one lasted ten years. I can't be the only lucky person in Spain...

Re your last comment: my two grandsons have been able to buy properties thanks to inheritances from my late daughter-in-law.
I think we'd all prefer to have Linda back...


----------



## Megsmum (Sep 9, 2012)

mrypg9 said:


> I got involved in buying old properties and doing them up for sale nearly forty years ago!!! My cottage, detached, flint, built in 1760 or thereabouts, cost me £5000 in 1978.. Way back then the local authorities gave you a grant for refurbishing old properties. You could rent them but couldn't sell for five years. I never paid more than £10k for a property apart from the one in Canada and that was about £50k sterling. I got a tenant as soon as I bought it as the property, in an old woollen mill, came with a guest apartment owners could apply to use.
> 
> I know this was long ago and things have changed. I didn't make £millions out of the five properties I bought and sold, just a reasonable profit. I know it's a lot harder nowadays for young people to get on the property ladder.
> 
> ...


I don’t think anyone, especially me said you made a lot of money, but to have the funds to purchase a property outright even years ago was the exception. My own parents, back in the early 60s desperately tried to buy but they were not the right class to get loans or mortgages and certainly could not buy a car outright let alone a house.

Re the last comment. I would hope my children would prefer to have me back but the cold starts reality is that in the U.K. youngsters are not able to buy until either a parent dies or remortgages a property to release fund, therefore the only alternative is renting for periods of 6 months at a time.


----------



## Lynn R (Feb 21, 2014)

Megsmum said:


> Re the last comment. I would hope my children would prefer to have me back but the cold starts reality is that in the U.K. youngsters are not able to buy until either a parent dies or remortgages a property to release fund, therefore the only alternative is renting for periods of 6 months at a time.


It would be more accurate to say that in some part of the UK youngsters are not able to buy. My sister's two sons have both bought their own homes (with the aid of mortgages). The elder bought a 3 bed detached house last year, his first property, and his younger brother traded up to a 3 bed detached also last year. The latter, incidentally, paid 5k less for the property than the original buyers had paid 9 years ago, when it was brand new. 

My sister died two months ago (killed whilst she was on holiday in Portugal when she was knocked down by a vehicle whilst crossing the road on a zebra crossing) but she had already seen them settled in their own homes with neither of them needing financial help from parents to buy.


----------



## Megsmum (Sep 9, 2012)

Lynn R said:


> It would be more accurate to say that in some part of the UK youngsters are not able to buy. My sister's two sons have both bought their own homes (with the aid of mortgages). The elder bought a 3 bed detached house last year, his first property, and his younger brother traded up to a 3 bed detached also last year. The latter, incidentally, paid 5k less for the property than the original buyers had paid 9 years ago, when it was brand new.
> 
> My sister died two months ago (killed whilst she was on holiday in Portugal when she was knocked down by a vehicle whilst crossing the road on a zebra crossing) but she had already seen them settled in their own homes with neither of them needing financial help from parents to buy.


So sorry to hear about your sister, how tragic. 

Yes, I would love to see my daughters settles into their own home before I die, but at least if I do I know they’ll have money for a start. My eldest who is a single mum, earns well over 65k. Her job however is in the south east a 2 bedroom flat is nearly 300k . She has requested a move up north where she can buy a three bedroom house for 200k. So yes, you are absolutely correct it’s very dependent on locality. My other daughter has a restaurant, near Chichester, unless they buy in a crappy desolate area they’ve got no chance to buy. I don’t think either are overly concerned with buying but the rental agreements are such rubbish that they feel trapped in a cycle


----------



## Lynn R (Feb 21, 2014)

Megsmum said:


> So sorry to hear about your sister, how tragic.
> 
> Yes, I would love to see my daughters settles into their own home before I die, but at least if I do I know they’ll have money for a start. My eldest who is a single mum, earns well over 65k. Her job however is in the south east a 2 bedroom flat is nearly 300k . She has requested a move up north where she can buy a three bedroom house for 200k. So yes, you are absolutely correct it’s very dependent on locality. My other daughter has a restaurant, near Chichester, unless they buy in a crappy desolate area they’ve got no chance to buy. I don’t think either are overly concerned with buying but the rental agreements are such rubbish that they feel trapped in a cycle


Thanks, I am sure anyone who has lost a loved one suddenly knows how it feels.

I do realise how different it is for people in different parts of the country. My stepdaughter and her partner, who live in the East Midlands, were only able to buy their first property very recently, in their early 40s, with help from an inheritance from his mother. They had never been able to save much of a deposit due to having to pay rent, and my stepdaughter was very nearly homeless at one point before she met her present partner, when she lost her job, payment of Housing Benefit was delayed and her landlord had a policy of not renting to people on benefits. It's dreadful to be in such a precarious position.

Providing she has a good job, I am sure your daughter's quality of life would be much better in the North, with more disposable income. Just tell her to be sure to pack her brolly!


----------



## Megsmum (Sep 9, 2012)

Lynn R said:


> Thanks, I am sure anyone who has lost a loved one suddenly knows how it feels.
> 
> I do realise how different it is for people in different parts of the country. My stepdaughter and her partner, who live in the East Midlands, were only able to buy their first property very recently, in their early 40s, with help from an inheritance from his mother. They had never been able to save much of a deposit due to having to pay rent, and my stepdaughter was very nearly homeless at one point before she met her present partner, when she lost her job, payment of Housing Benefit was delayed and her landlord had a policy of not renting to people on benefits. It's dreadful to be in such a precarious position.
> 
> Providing she has a good job, I am sure your daughter's quality of life would be much better in the North, with more disposable income. Just tell her to be sure to pack her brolly!


She is totally and utterly focused on giving her son the best life possible. Yes, she says the same, disposable income be much better. I have a thought that there might just be a “man” in the mix 😂


----------



## blondebob (Aug 16, 2019)

A young couple I know had a conundrum a few years back. They lived and worked in Leeds where they had a 4 bed detatched house which was valued at around 375k at the time. He was headhunted and was offered a position which more than doubled his 50k salary but the company was based in West London. They came to have a look at property around Reading/maidenhead area. They were shocked to see that a similar house in a reasonable area was more than double the cost of their house in Leeds. Even with the extra 60k a year salary they couldn't get close to being able to afford the move so ended up staying put. But moving the other way and you'd be quids in, but the majority don't want to do it as they see it as a backwards step. A big shame that property prices in the South are so unrealistic that it hinders career progression.


----------



## Chopera (Apr 22, 2013)

Ifn said:


> I know this has been discussed before but it keeps coming up in my mind. I’m older, 70, and I rent in Madrid. I had every intention when I came here a year and a half ago, of buying a place. It’s how I lived in NY. But then I read about all the added taxes and fees.
> There are added cost in NY too like high maintenance fees..I’m talking apartments, not homes . But as I read stuff here I thought it would be wiser to rent. I’m older, there are more taxes here, I think....I’m not actually sure. Renting seems very precarious to me. I have a nice landlord but I was thinking of moving. I pay a lot of rent and while I do have a lot of space, the way it’s laid out, is not useful for me, I’m an artist and I wanted a bedroom to be my studio. But the second bedroom is the size of a nursery.
> I should add that the issue of inheritance, of leaving something for someone else, is not a factor for me. Nor is having a mortgage. I would prefer to pay outright.
> But for those of you who did buy apartments and homes, could you describe what the pros and cons are? Gracias.


I've bought twice in Madrid. The costs associated with ownership vary but generally I think for a 2 bed apartment you end up paying about 100 euros a month on community fees and maybe 50 euros a month on the local council tax. If the apartment has a pool, gardens, central heating, or is in an older building with higher maintenance then the community fees will be higher to cover these. The purchase costs are about 10% (more if it's a new property). You will also have costs of maybe 3% to sell it.

So let's say you want to buy an apartment for 200k euros and live in it for 5 years. That's about 20k in purchase costs, 9k in community and tax costs over 5 years, and 6k to sell it. So 35k euros altogether (assuming the value of the property doesn't change).

If renting the same apartment was say 700 euros a month then over those 5 years you end up spending 42k euros. So over a 5 year period buying wins, with those figures.

I haven't factored in lost interest on the money that has been used to buy the property, but then again I assumed it wouldn't go up in value either.

Of course you'd need to adjust the figures to suit the apartment you are considering buying, but that's how I would work it out.

BTW you say you're not concerned about leaving the apartment for someone else as an inheritance, but it inevitably will go to someone else if you die while it is in your possession. That someone else might well be decided by the Spanish government under Spanish inheritance law. It might be something you need to look into.


----------



## Ifn (Jan 29, 2017)

Chopera said:


> I've bought twice in Madrid. The costs associated with ownership vary but generally I think for a 2 bed apartment you end up paying about 100 euros a month on community fees and maybe 50 euros a month on the local council tax. If the apartment has a pool, gardens, central heating, or is in an older building with higher maintenance then the community fees will be higher to cover these. The purchase costs are about 10% (more if it's a new property). You will also have costs of maybe 3% to sell it.
> 
> So let's say you want to buy an apartment for 200k euros and live in it for 5 years. That's about 20k in purchase costs, 9k in community and tax costs over 5 years, and 6k to sell it. So 35k euros altogether (assuming the value of the property doesn't change).
> 
> ...


Thanks, you’ve made many good points. I’ll have to sit down and do the math. 
A couple of things. 
I didn’t mean I don’t have a will. Although I have to re-do it I believe now that I m living here. That’s a whole other subject! I meant I don’t care if the value increases when I’m dead. But it would be part of my estate. 
One point that I see differently is your comparison of output. I would include the hypothetical 200k€. I’m not looking at this as an investment to make money from on resale. This is what I want to be a permanent home. Homes I’ve purchased in the past , I lived on for over 10 years and only moved out of necessity.


----------



## Chopera (Apr 22, 2013)

Ifn said:


> Thanks, you’ve made many good points. I’ll have to sit down and do the math.
> A couple of things.
> I didn’t mean I don’t have a will. Although I have to re-do it I believe now that I m living here. That’s a whole other subject! I meant I don’t care if the value increases when I’m dead. But it would be part of my estate.


 :thumb:



Ifn said:


> One point that I see differently is your comparison of output. I would include the hypothetical 200k€. I’m not looking at this as an investment to make money from on resale. This is what I want to be a permanent home. Homes I’ve purchased in the past , I lived on for over 10 years and only moved out of necessity.


I've basically assumed you've got 200k to spend and you can either invest it elsewhere or in a property, but either way you start off with 200k and end up with 200k (after selling the property if you had chosen to buy).

But if you intend to spend the rest of your years in the property then yes you won't have to consider the selling costs (the inheritors would have to deal with those instead)

Also, as an aside, quite often older people in Spain who own their property outright sell what is known as the "nuda propiedad". Basically they sell the rights to the property upon their death. So if you own a 200k property you could sell the nuda propiedad for say 130k and still live in it as before. The difference being that the property passes to whoever bought the nuda propiedad when you die, but you get the 130k to play with. If you consider going this route you'd need to get professional advice, as I'm sure there are many pitfalls, but it might be worth investigating.


----------



## baldilocks (Mar 7, 2010)

Making a will, you need to have it made under the European Succession Regulations, Article 22. This enables you to have your estate distributed according to the law of your nationality, rather than under Spanish law which says specifically who gets what and maybe not what you would wish.


----------



## Ifn (Jan 29, 2017)

Chopera said:


> :thumb:
> 
> 
> 
> ...


As I “casually” look at properties online, I’ve seen a few of these. Considering how long people can live that does not seem like a wise investment for the buyer. Remember the case of the woman in France who lived to 123? She outlived the buyer. Do people really do that?


----------



## Ifn (Jan 29, 2017)

baldilocks said:


> Making a will, you need to have it made under the European Succession Regulations, Article 22. This enables you to have your estate distributed according to the law of your nationality, rather than under Spanish law which says specifically who gets what and maybe not what you would wish.


Thanks Baldi. I’ve got a couple of things to settle first. After all...I’ve only been here 1 and 1/2 years! I’m just a child in that regard.
There is still the issue of wether I will apply for citizenship through my father who was born here. That might effect any USA will that I have.


----------



## Chopera (Apr 22, 2013)

Ifn said:


> As I “casually” look at properties online, I’ve seen a few of these. Considering how long people can live that does not seem like a wise investment for the buyer. Remember the case of the woman in France who lived to 123? She outlived the buyer. Do people really do that?


Yes the buyer has to make calculations similar to those made by life insurance companies, i.e. estimate how long the owner will live for and work out the value of the property accordingly. I guess if the buyer thinks the property will go up in value during the remaining lifetime of the occupants he/she might think it worth a punt. 

Also you have to bear in mind that it's much harder to work out the market value of properties in Spain since actual selling prices of properties aren't published, and estate agents ("realtors" in the US?) seem to be happy to let the seller name the price of the property, even if it means the price is way too high and sits on their books for years. The upshot is that most properties are overvalued and there should be room to negotiate.


----------



## Marikelv (Aug 21, 2019)

Well, I think no matter what you do - rent or buy property in Spain (an apartment or a house), it is now three times cheaper (−35%) than in 2005. It's just necessary to ensure that you are getting a legal sale and there won’t be any troubles. As I know, there have been some big scandals over this in the last years. There is a national register of properties and so it is not hard to guess you buy a safe property. The process of buying for non-residential is pretty fast.


----------



## Elyles (Aug 30, 2012)

Ifn said:


> I know this has been discussed before but it keeps coming up in my mind. I’m older, 70, and I rent in Madrid. I had every intention when I came here a year and a half ago, of buying a place. It’s how I lived in NY. But then I read about all the added taxes and fees.
> 
> There are added cost in NY too like high maintenance fees..I’m talking apartments, not homes . But as I read stuff here I thought it would be wiser to rent. I’m older, there are more taxes here, I think....I’m not actually sure. Renting seems very precarious to me. I have a nice landlord but I was thinking of moving. I pay a lot of rent and while I do have a lot of space, the way it’s laid out, is not useful for me, I’m an artist and I wanted a bedroom to be my studio. But the second bedroom is the size of a nursery.
> 
> ...




I was a broker in the US long before I became a psychologist. Ownership is purely emotional. Renting however is smart for anyone wanting to look around at different stuff available on the market. Real estate ls like values in color. There are many values for each color thus, many types of property available. I have no idea what energy you have put into your search but, it may take time. You are an artist, needing studio space? Try moving outside the city. Just out of personal curiosity, what type of artist are you. 

More on advantages
1. Sense of ownership
2. Control of how the property is set up
3. Etc.

Disadvantages
1. Not paying 12% up front sales cost
2. Not paying community fees
3. Being under the control of the landlord
4. Being restricted to a lease
5. Being stuck with what is already in the apt.


Sent from my iPad using Tapatalk


----------



## Dominic Lopecas (Aug 9, 2019)

Live is what you choose, but rental accommodations give you the advantages of move on very quickly, property-ownership does not. I own a property in Malaga and it set in a negative equity, so should I have put that capital €350000 in the stock market in London I would have generate a income above 8 to 11 % per anon, and in Spain has generated nothing but lost of his value that I have paid by 21.5%,as the Spanish economy move in reverse. So my advise keep on renting that is fare better for you.


----------



## Ifn (Jan 29, 2017)

Elyles said:


> I was a broker in the US long before I became a psychologist. Ownership is purely emotional. Renting however is smart for anyone wanting to look around at different stuff available on the market. Real estate ls like values in color. There are many values for each color thus, many types of property available. I have no idea what energy you have put into your search but, it may take time. You are an artist, needing studio space? Try moving outside the city. Just out of personal curiosity, what type of artist are you.
> 
> More on advantages
> 1. Sense of ownership
> ...


Well, as you must know, emotions are important. I want to settle without the whims of a landlord or changes in rent. Then I’d have to move. Renting, I wouldn’t be able to change the space to my needs. And in the situation I’m in now, I have to be extra careful preserving the furniture, which is hard, because it’s cheap ikea laminate.
These issues are emotional but also practical.
I’m a city person.


----------



## mrypg9 (Apr 26, 2008)

In a couple of years or so supply will outstrip demand yet again, as in 2008, and boom in construction will turn to bust.
Real estate prices will tumble, as will rents and many buyers may find themselves with negative equity.
It's inevitable. The iron law of capitalism. Kondratiev Wave Theory and all that.
But the stock market will hold. It always does, in the long run.


----------



## NickZ (Jun 26, 2009)

It really depends on what you buy and where. But I get the impression the OP isn't buying for gain.


----------



## ydukes (Jun 27, 2011)

Lynn R said:


> I don't quite understand how you can have negative equity on a mortgage-free property. Doesn't negative equity mean that the value of the property is less than someone borrowed to pay for it? When I sold my original house, I didn't recoup the cost of the transfer tax, etc. although I did get back the original purchase price. Had I rented the house for that period, I would have got back nothing at all.
> 
> We rent out our parking space (as we don't have a car) which more than pays for our monthly community fees. In fact it covers our water bills, too.



No, it means it is not worth what you paid for it.


----------



## ydukes (Jun 27, 2011)

No, it means it is not worth what you paid for it regardless of whether you have a loan or not, you have lost many if you sell it at the lower price


----------



## Lynn R (Feb 21, 2014)

ydukes said:


> No, it means it is not worth what you paid for it regardless of whether you have a loan or not, you have lost many if you sell it at the lower price


You obviously haven't looked up the definition of "negative equity".

https://www.investopedia.com/terms/n/negativeequity.asp


----------



## mrypg9 (Apr 26, 2008)

Lynn R said:


> You obviously haven't looked up the definition of "negative equity".
> 
> https://www.investopedia.com/terms/n/negativeequity.asp


Quite. Equity here simply means share of current value related to outstanding debt.


Without the encumbrance of mortgage debt your property will still hold value albeit a reduced one. But depending on the original purchase price should you sell you may still realise a profit even allowing for inflation.

I did just that in the UK. , I think it must have been around the early or mid 1990s?
Many years ago anyway.


----------



## mrypg9 (Apr 26, 2008)

Incidentally, the downturn in construction and real estate had slowly begun to show itself even before the virus. That's especially noticeable around Estepona where major projects have been underway over the last couple of years. Now with this major blow to the economy things will surely get much much worse.

Apart from bewilderment as to how existing infrastructure will cope with the tens of thousands of new builds, I'm wondering who their purchasers will be. I know the populations of all western European states are ageing but some countries e.g. Scandinavia actually have small populations and U.K. buyers may not be so keen with the post-Brexit uncertainties.

Thankfully not my problem. I'm so glad not to be burdened with the responsibilities of property ownership any longer and very content in my cosy little rented finca with my lovely landlord.


----------



## Overandout (Nov 10, 2012)

mrypg9 said:


> Incidentally, the downturn in construction and real estate had slowly begun to show itself even before the virus. That's especially noticeable around Estepona where major projects have been underway over the last couple of years. Now with this major blow to the economy things will surely get much much worse.
> 
> Apart from bewilderment as to how existing infrastructure will cope with the tens of thousands of new builds, I'm wondering who their purchasers will be. I know the populations of all western European states are ageing but some countries e.g. Scandinavia actually have small populations and U.K. buyers may not be so keen with the post-Brexit uncertainties.
> 
> Thankfully not my problem. I'm so glad not to be burdened with the responsibilities of property ownership any longer and very content in my cosy little rented finca with my lovely landlord.


Although noticeable on the coasts in some areas, expat / foreign buyers still count for little in the real estate market in Spain as a whole. It is still a predominantly national market.

That said, it has to be expected that we will see another crash in prices of property as we did after the last crisis.

I paid about 235k€ for an apartment in Madrid in 2007. In 2011 it was worth about 120k. A few months ago it had probably gone back up to around 150k€. By the end of this year I'd be surprised if it is worth any more than 120k€ again, probably less. We rent it out, but the rent doesn't even cover the mortgage payments.

For those with a bit of spending power though, this crash will at least provide some investment opportunities. I recall that in the darkest days of the last recession, you could get a small apartment (needing work) within walking distance of the beach in Valencia region for 40k€. I guess we are about to see the return of these types of offers coming back onto the market.

Landlords who bought to rent may be in trouble too, if we reach the IMF's predicted 21% unemployment rate, rents will probably fall again too. At least this might make small homes more accesible for younger people, if they are lucky enough to have a job of course.


----------



## NickZ (Jun 26, 2009)

Overandout said:


> For those with a bit of spending power though, this crash will at least provide some investment opportunities. I recall that in the darkest days of the last recession, you could get a small apartment (needing work) within walking distance of the beach in Valencia region for 40k€. I guess we are about to see the return of these types of offers coming back onto the market.
> 
> .


Further south even a couple of months ago you could find two bedroom apartments for not much more than that. Relatively new and more or less in move in condition. I had started looking again in January. 

It'll be interesting what happens on the islands. With no flights all those places bought to rent to tourists have to be in serious trouble. Some are showing up for rent but with monthly rents a fraction of what the tourist market paid.


----------



## Dominic Lopecas (Aug 9, 2019)

Overandout said:


> Although noticeable on the coasts in some areas, expat / foreign buyers still count for little in the real estate market in Spain as a whole. It is still a predominantly national market.
> 
> That said, it has to be expected that we will see another crash in prices of property as we did after the last crisis.
> 
> ...


Definitely it would ge far worse in the next two years, Spain has a massive debts of 98.6% of the national GDP, so the room for improvement is very limited, Spain would have to apply a very estrange austerity mesures to reduce its cost, a cross all 5.5millions government employs, and reduce taxes to make the economy more attracted to oversee investors.


----------

