Buying cheaper than renting in 47 out of 50 UK towns - research

Published by Jon Land for 24dash.com in Housing

Buying is now cheaper than renting in 47 of the 50 largest towns across the UK, according to new research published today.

High rental demand, due to the difficulties would-be buyers are facing in getting financing, coupled with low mortgage rates has made buying a property in Britain more attractive today than it has ever been, says Zoopla.

The continued mortgage drought and the rising demand for rental properties has led to the average rent now costing 15 percent more than the average mortgage.

To compare the cost of buying versus renting, Zoopla analysed the current asking prices and rents of over 78,000 two-bedroom flats currently on the market, comparing the rental cost to the cost of ownership based on servicing an interest-only mortgage at 5 percent p.a.

Swansea, Plymouth and Bournemouth are the only three locations on the list of 50 towns where it remains cheaper to rent than buy.

In contrast, Milton Keynes comes top of the list of locations where buying beats renting. Zoopla's research shows that it currently costs 36 percent more to rent than buy in the town, leaving renters £2,436 per year worse off on average.

In London, where the average asking price for a two-bedroom flat currently stands at £442,036, buying also trumps renting by a big margin.

With average monthly rents in the capital at £2,416, renting is 31 percent more expensive than the cost of ownership, leaving renters paying an extra £6,888 annually on average compared to owners.

Nicholas Leeming of Zoopla.co.uk, said: “Although buying may be more cost-effective than ever compared to renting, many potential buyers aren’t able to take advantage because they can’t access mortgage finance.

"The shortage of financing, especially to first time buyers, has pushed demand for rental property through the roof. But for those lucky enough to be in a position to get a mortgage, there may never have been a better time to buy.”