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Buying is cheaper than renting… for those that can get on the ladder

Christina Hoghton
Written By:
Christina Hoghton
Posted:
Updated:
22/03/2022

If you can get together a sufficient deposit and access a mortgage, your monthly repayments are likely to be lower than the equivalent rent

Monthly housing costs for first-time buyers are £115 (13%) lower than renting an equivalent home, said Halifax.

The lender said that this could add up to more than £27,600 over a 25-year mortgage.

In its annual Buying vs Renting Review Halifax looked at the housing costs associated with a mortgage on a three-bed home, and compared it to the average monthly rent of the same property type.

Last year, monthly rental costs grew by 6% to £874, while buying costs increased just 2% to £759, a monthly difference of £115, or £1,378 for the full year.

Regional split

The biggest differences proportionately in mortgages and rent were in Scotland and the North West at 22%.

The greatest gap between rent and a mortgage in absolute terms was in London, where renting is £4,181 more expensive. The smallest gap was in Northern Ireland, where renting was just £17 per month (3%) higher than ownership.

Esther Djikstra, mortgages director at Halifax, said: “Over the last year, we have seen record numbers of buyers entering the market, moving to bigger properties and taking advantage of the Stamp Duty holiday.

“However, historic lows for interest rates have kept mortgage costs down, compared to rents.

“Still, before homebuyers can benefit from lower monthly costs, a deposit needs to be put together, still the greatest challenge for many first-time buyers. The £62,000 average deposit we see in our data may be an unimaginable sum to potential first-time buyers, but it’s much higher than many need to get a foot on their housing ladder.

“Deposits from 5% are available and, based on the average house price, mean putting down a £12,500 deposit – significantly less than the average.”