Thursday, December 15, 2011

Renting versus buying

A survey published by zoopla; and published in today's Daily Telegraph reports that in 47 out of 50 large towns in Britain the cost of renting exceeds that of repaying a mortgage. In the case of London it costs 31% more to rent a property than to buy. As a result, potential buyers are faced with ever higher rents, making it even more difficult to save for a deposit.

Compared with Britain at 70%, France has a relatively low level of ownership of principal homes (at 56%), well behind other European countries such as Spain, Greece and Italy. Out of 27 million French households, 43% are renters, with 11.6 households choosing or being obliged to rent. With over 3 million second homes, many choose to live in rented accommodation (as their principal home) and 'invest' in the second home, either for rental, holidays or eventual retirement.

During the current economic crisis, the French property market has been slower than normal, as French banks and mortgage providers excercise more than their usual caution regarding deposits and the one-third income rule - even though, as in Britain, monthly rentals can equal or sometimes exceed rental payments. The banks' traditional insistence that borrowers should show evidence of a long term work contract (CDI) seems somewhat archaic in view of continual employment uncertainty, and the growing numbers of newly self-employed (an estimated half a million, though many part time, created in the last two years).

Source: Property