Costs to first time buyers are £900 per year less compared to renters and over their mortgage term buying a home saves them £27,000.
The latest Halifax Buying vs Renting Review reveals first time buyers can save £900 per year by owning their own home rather than renting and are £27,000 better off over the term of a 30 year mortgage.
Research found that the average cost of buying a three bedroom home including mortgage payments was £679 a month in December 2017 whereas renting this type of property cost £754.
This would suggest that home movers would always benefit by buying rather than renting and give them more disposable income.
Large numbers of people renting has benefited buy-to-let investors in the previous decade although changes to taxation from April 2016 could help to reverse this trend.
Largest savings made in London
Buying is more financially attractive than renting across the UK with the largest saving in London at £2,191 per year and the smallest in Yorkshire & the Humber with £589 per year.
This table from the Halifax shows average monthly buying costs and annual savings over rental costs by region for December 2017.
| Region | Buying cost |
Rental cost |
Savings (pa) |
|---|---|---|---|
| Greater London | £1,363 | £1,545 | £2,191 |
| South West | £719 | £862 | £1,722 |
| Scotland | £503 | £606 | £1,240 |
| West Midlands | £552 | £655 | £1,229 |
| East Midlands | £542 | £636 | £1,134 |
| Wales | £470 | £561 | £1,100 |
| South East | £991 | £1,083 | £1,098 |
| North | £444 | £529 | £1,018 |
| North West | £518 | £595 | £929 |
| East Anglia | £709 | £784 | £899 |
| Northern Ireland | £389 | £451 | £747 |
| Yorks & Humber | £488 | £537 | £589 |
As a percentage, Scotland and the South West of England have the biggest gain where buying is 17% lower than renting.
The average cost of buying is 22% or £192 per year lower than 2008 while rental payments have increased 22% or £138 each year over the same period.
This demonstrates the benefit for remortgage buyers to look for competitive deals when their Introductory offer ends and reduce the monthly repayment costs.
For buy-to-let investors there are potential profits of renting out properties and these can be improved by remortgaging to reduce the cost of interest repayments to lenders.
Buying cheaper than renting since 2010
The data shows renting was cheaper than buying in 2008 when average monthly payments for owning a property were £871 and renting were £616 resulting in an annual additional cost of buying a home of £3,063.
As the financial crisis deepened, this annual difference reduced to £199 more expensive to buy than rent changing in 2010.
Russell Galley Managing Director Halifax said, the gap between buying and renting has widened significantly, primarily in the reduction in mortgage rates and a more competitive market.
There are record numbers of first time buyers taking their first step on the property ladder with the low mortgage rates and government schemes including Help to buy.
The longer term advantage of owning rather than renting is the older equity release buyer can stay in their home while accessing the wealth in their property with a lifetime mortgage to help maintain their standard of living as costs rise.
What are your next steps?
Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.
Learn more by using the mortgage monthly cost calculators, property value tracker chart and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything such as repay an interest only mortgage or gift to a family member or friend.
Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.
