Home Ownership Is Completely Overrated

My 30 year love affair with home ownership is well and truly dead. I am divorcing myself of it.

I will NEVER buy another home to live in.

For three decades I have been advising on finance and property and building my own rental portfolio but it has taken me until now to realise that home ownership is overrated.

My recommended strategy to anybody from now on will be to rent the home you live in and own property that you can rent to other people.

Why?

Because home ownership is a millstone around your neck!

Because the return on capital from home ownership is pathetic in comparison to property investment!

Because mobility is crucial in modern life!

Because life is just too short!

For many years I believed that I was doing the right thing by owning the home I live in. It is a common British mentality so I didn’t think to challenge it. Now the fog has lifted I see what a fool I have been. I dare not think too deeply about all the opportunities I’ve missed due to my former obsession with home ownership, which I now realise has held me back on so many occasions.

I’ve had this discussion with a lot of people recently so I’ve heard and debated several counter arguments in favour of home ownership already; here’s a few examples:-

• You can’t decorate – I don’t want to, the place I’m renting is lovely as it is and if I get bored I can move on a whim.
• You can’t plant trees and flowers – I did that at my last home and it’s hard work. If I want trees and flowers I will rent a property with trees and flowers that have been planted by somebody else. If I ever get bored of the spectacular sea views I’m enjoying at this very moment I might decide to live on a golf course.
• You will lose your place on the property ladder – maybe, but only if I don’t own other property which I rent out. Given that my rental properties produce a far greater return than capital tied up into home ownership I am actually in a position to climb the property ladder quicker if I choose to do so.
• Renting is dead money, you are paying somebody else’s mortgage or pension – I am indeed, and I do not begrudge that. For somebody else, owning the property I am living in makes sense, even if it is only returning them a 2% yield. On the flipside, my tenants are paying my mortgages and the rental profits are paying my rent, and some more on top.
• You don’t get the same choices in terms of furniture etc. – Yes I agree (to a point), I get far more choices and I am far less bound by them than I would be if I owned the home I live in and the furniture within it.
• There’s no CGT on capital gains when you sell a UK home – agreed, but what if you don’t want to live in the UK anyway?

As you may be aware, I decided at the beginning of this year to live on the gorgeous Mediterranean Island of Malta. My new beliefs regarding home ownership would be no different if I had decided to remain in the UK though. Nevertheless, moving to Malta has helped me to see things from another perspective so perhaps I should also explain why I made that move.

Malta has numerous advantages over and above 300 days a year of sun filled lifestyle for me. Five percent income tax on UK dividend income and virtually no CGT on property sales or incorporation of a rental property portfolio, even with latent gains, being two big financial ones. That choice (living in Malta) raises other critique though such as:-

• You can’t see your loved ones as often – oh yes I can, they love the free holidays and the tax I save even allows me to buy them flight tickets for birthday and Xmas presents. I speak to Mum and Dad via Skype frequently. They’ve been here to stay with us for a total of 42 nights in the last three months (that’s 6 weeks) which means I actually seen more of them then when I lived just 30 miles away!
• The time you can spend in the UK is very limited for the first 5 years – it is indeed if the reason for moving is to become a tax exile, in my case to just 14 days any rolling year. However, the world is a very big place. I can’t see myself needing to use up my annual visiting allowance to the UK any time soon, certainly not within the next five years anyway.

I’ve realised that for the last 30 years I had been lying to myself, have you?

By the way, I recently wrote this linked blog to help frustrated first time buyers to deal with their own stinking thinking.

Whilst I don’t want to over sell living in the the jewel of the Mediterranean (it isn’t everybody’s’ cup of tea) here’s a few more of my observations which you might find interesting:-

• The National Health system is far better than in the UK. The 11th best hospital in Europe is here.
• We drive on the left.
• English is the second official language, everybody speaks it.
• The education system is good and there are English private schools
• Unemployment is less than 1% and crime rates are much lower than the UK
• Malta has the second strongest economy in the EU
• The island has close connections to the UK and is steeped in history with monuments pre-dating the Egyptian Pyramids and Stone Henge

This blog isn’t supposed to be about living in Malta though. I only added that detail because it’s my blog, hence it’s also personal to me. I will look back on this in years to come.

The real purpose of this blog is to raise debate on whether home ownership makes sense.

It has taken me nearly 30 years to realise that home ownership is overrated.  Better late than though never hey?

So what’s your excuse for owning the home you live in?

I look forward to reading your thoughts on the subject.

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