How buying a home is still cheaper than renting across the UK – but the gap is closing
BUYING a home in the UK is significantly cheaper than renting, as data out today shows first-time buyers are on average £651 a year better off than those who rent.
The average monthly costs - including mortgage payments - associated with buying a three-bedroom house in the UK are £705 - £54 more than the typical monthly rent of £759 for a similar property.
Over a year this adds up to £651.
And homeowners in London save even more, with the typical first-time buyer paying £161 a month less than the average renter (£1,420 against £1,581) - an annual saving of £1,927.
In East Anglia there is only a £7 difference in the average monthly costs between buying and renting (£736 compared to £743).
Despite the disparity in costs between renting and buying, Halifax's data found that the gap has narrowed over the past year, by £19 a month.
That's because over 2016, buying costs rose by 5 per cent, whilst the average rent rose by 2 per cent.
Halifax said that since 2011, the financial gap in favour of buying compared to renting has fallen by a third (32 per cent) with the average rent rising by £107 a month, whilst average buying costs have increased by £133 a month.
Although average mortgage rates are at historical lows, a 45 per cent increase in the price of a typical first-time buyer home has made buying costs rise.
Martin Ellis, housing economist at Halifax, said: “Although the average costs associated with buying costs have grown at a faster rate than average rents over the past few years, owning a home is still the more financially attractive option.
"However, the gap has narrowed since 2011 because of the rising prices of a typical first-time buyer house."
Earlier this month, The Royal Institution of Chartered Surveyors (Rics) said that rental prices are predicted to outpace house price inflation as landlords scale back the number of properties on their books.
Rents are expected to increase by just over 25 per cent, while house prices will rise by just under 20 per cent.
Almost 339,000 first-time buyers bought a home last year, growing from 312,900 in 2015 – the highest level since the start of the financial crisis in 2007.
Nationally, the average deposit put down for a typical three-bedroom first-time buyer home is £30,770, while, unsurprisingly, Londoners pay the highest average deposit, at £110,927.
This is seven times higher than buyers in Northern Ireland who pay a deposit of £15,830, and more than twice the amount buyers in the south east pay (£51,082).
Research out last week found that the average London home now costs £578,381 – almost double the price of property across England and Wales, where they average £278,750.
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