Buying cheaper than renting in 88% of UK

Published by Max Salsbury for 24dash.com in Housing and also in Finance

It is cheaper to pay a mortgage than to rent in 88% of British towns, a new report reveals.

It was found that in 44 of 50 towns, the cost of paying off an interest-only mortgage is lower than the cost of renting the equivalent property.

The research - conducted by property website Zoopla - shows that York, Milton Keynes and Derby are the most expensive places for rents compared with buying, whilst it was found that renting was actually cheaper than buying in Bournemouth, Swansea and Oldham.

Two-bedroom flats outside of London are currently averaging a monthly rental price of £659, while the average cost to buy is £139,451. Paying an interest-only mortgage at 5% per annum on such a property would cost £581 a month, making renting 13% more expensive and saving buyers nearly £1,000 a year.

The disparity between renting and buying is greatest in London, where average rents are 17% higher than servicing a mortgage. Two-bedroom flats in the capital are currently going for £483,069, compared with monthly rents of £2,362, meaning London buyers are £4,200 a year better off than renters.

Lawrence Hall of Zoopla said: “Whilst buying is clearly the better option than renting at the moment based on our research, the difficulty in saving for a deposit and the tight lending conditions are preventing huge swathes of would-be buyers from taking advantage of the current lower cost of owning a home. And with more potential buyers being forced into the rental market, rents are rising based on the higher demand.”