Buy to Let

Buying vs. renting – which is cheapest?

Christina Hoghton
Written By:
Christina Hoghton

For those who can raise a deposit, monthly mortgage costs are now cheaper than the average rent in all but one region

Homeowners are nearly £500 a year better off than renters, according to Halifax.

The lender found that the monthly cost of owning a home is now £42 less than renting the equivalent.

The monthly cost of owning a home for first-time buyers is £971 compared to renting at £1,013 according to the latest Halifax Owning vs Renting Review.

The analysis is based on housing costs for first-time buyers with a mortgage on a three-bed home compared to the average monthly rent of the same property type.

Regional splits

The UK’s greatest gap between owners and renters, in percentage terms, can be found in Scotland. Those renting in the nation pay an average £918 per month, compared to £727 for homeowners – a saving of 21% for those on the property ladder.

In cash terms, the difference greatest is in London, where homeowners are paying nearly £3,000 less each year than those renting similar homes.

The East of England is the only region or nation in the UK where it is more expensive to own a property than rent the equivalent. Homeowners there now pay £90 more each month, on average, than those renting.

In cash terms, deposits being raised in the North East are the lowest in the UK – at £32,920, around 19% of average property prices in the area.

Outside of London – where those buying a first home are raising a huge £188,663 on average – properties in the South East and East of England also require hefty deposits from new homeowners, at £97,320 and £87,157 respectively.

Kim Kinnaird, mortgages director at Halifax, said: “Of course, making the move from renting to home ownership can be difficult for many, as raising a sufficient deposit and then finding the right property can be challenging.

“While a predicted fall in house prices this year will be welcome news for those looking to buy their first home, it doesn’t change the fact that getting on the property ladder remains expensive – a problem that is compounded when rents are high, impacting the ability to save.”