The cities in the UK where it’s cheaper to buy than rent – but London is the complete opposite
Renters in London pay £1,840 versus the average monthly mortgage repayment of £2,168 - a £328 gap
IT'S taken for granted that buying a house rather than renting will work out as the best option financially, but for Londoners that might not be the case.
New research has found that buying a property is cheaper than renting in 49 out of 50 largest British cities except for the Capital where it works out more expensive on a monthly basis, according to Zoopla.
Renters in London pay £1,840 versus the average monthly mortgage repayment of £2,168 - a £328 gap.
While at the other end of the scale, a homeowner in Glasgow would pay £377 a month in mortgage repayments versus a renter who would pay £675 for the same-sized property.
Other cities - mostly found in the north of the UK - also favour those who can afford to own their own home.
The research is based on the current average asking price and rental value of a two bedroom flat in the UK's 50 biggest cities, calculated by the number of properties.
The homeowner would need as 15 per cent deposit, on a 25 year mortgage with a fixed rate of 2.4 per cent.
Of course, in the long run homeowners will benefit from rising house prices when it comes to selling their home.
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In fact, yesterday we reported on how house prices are now rising at their fastest rate since January.
While that's great new for homeowners it's just one of the obstacles facing those trying to get on the housing ladder.
Renters must figure out a way to save up for a deposit while paying for high levels of rent and find a way to get accepted for a mortgage big enough to cover rising house prices.
Last month, the Chanceller scrapped stamp duty for first-time buyers, as long as properties cost less than £300,000.
But the Office for Budget Responsibility has warned that it would push house prices up by 0.3 per cent.
How to get help buying a house
THERE are several government schemes available to help you get on the housing ladder.
- Help to Buy loan: This scheme is for those who have a 5 per cent deposit, and is only available on new-build properties that are worth less than £600,000. The government lends you up to 20 per cent of the property value (interest-free for the first five years) which gives you access to cheaper mortgages. You will need to pay this back at the end of the mortgage or when you sell.
- Starter Homes: First-time buyers under the age of 40 can access this new scheme. You’ll get a 20 per cent discount on the market value of the property (new-build only) but you cannot sell or let the property for five years after you buy it.
- Shared ownership: This scheme is available to non-homeowners who earn £80,000 a year or less (£90,000 in London). People can buy a share of a home from a housing association and continue to rent the remainder. Buyers will need a ten per cent deposit as well as money to cover stamp duty and other fees. You’ll also need to find a mortgage lender that is willing to lend on shared ownership properties
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