Buying costs £742 less than renting
Making the leap onto the property ladder will save first-time buyers £742 a year compared to remaining in a rented property, new figures from Halifax have found.
The bank said the average new buyer spent £658 per month on a typical three-bedroom property, compared to a monthly rent of £720 for the same property type.
These costs include mortgage payments, household maintenance, repair, minor alterations, insurance costs and income lost by funding a deposit rather than saving.
In purely cash terms London saw the biggest disparity between buying and renting with the typical first-time buyer able to save £112 each month by leaving the rental market behind, £1,338 each year.
In the North West buyers could save 17% by purchasing a home, with the average monthly rent standing at £631 compared to £523 for buyers.
Buying was cheaper than renting in all areas of the UK.
The gap between renting and purchase widened over the last five years when the difference was £180 per annum. Since 2009 average rents have risen £159, twice as fast as monthly buying costs.
Craig McKinlay, mortgage director at Halifax, said there were several factors making purchasing a more attractive option.
“Average home buying costs are significantly lower than average rental costs, providing first-time buyers with a large financial saving if they can get on the housing ladder,” he said.
“While the timescales associated with raising a sufficient deposit to buy a home present a hurdle to many potential first-time buyers, the significant difference in costs between buying and renting, combined with still low mortgage rates, increased consumer confidence and the Help to Buy scheme, have all been factors driving the substantial rise in first-time buyers over the past two years.”