Despite the recent spike in interest rates, owning a home is still cheaper than renting.
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Analysis by Halifax found that for a first-time mortgage buyer, the monthly cost of owning a three-bedroom house is £42 less than the cost of renting an equivalent property.
Renting such a property costs an average of £1,013 a month, compared to a mortgage of £971. The difference is almost £500 every year.
Barriers to purchase
“The projected fall in house prices this year will be welcome news for those looking to buy their first home,” said Kim Kinnaird, director of mortgage lending at Halifax. But “that doesn’t change the fact that getting on the property ladder remains expensive – a problem compounded when rents are high.”
According to the research of A The Hamptons With estate agents, a first-time buyer with a 15% deposit can take ten years to reach their target – and a further five years if they’re looking to buy in London.
Rents have risen in recent months and the trend is forecast to continue due to “increasing demand from tenants and a shortage of rental properties,” said Guardian. Rising mortgage costs and tax changes are encouraging many “smaller landlords” to sell.
Some first-time buyers have criticized Chancellor Jeremy Hunt for failing to introduce major changes to housing policy in his Budgetand “the dream of owning a house” is now “even more unattainable”, he said i news website.
Regional rents
The East of England is now the only region or country in the UK where it is more expensive to own property than to rent, according to analysis by Halifax. Here, home owners pay an average of 8% more per month – around £90 – compared to renters in equivalent properties.
The opposite is true in London, where owning a home saves an average of £2,950 a year compared to renting. The biggest percentage gap between owners and renters is in Scotland, where homeowners save an average of 21%.
However, experts note that monthly payments are only part of the cost of owning a home. There are costs such as building insurance, home repairs and maintenance costs such as boiler maintenance, he says which one?.
“Uber-rich renters”
“The vast majority of ‘tenants’ cannot afford to buy,” they said The Times. This includes “doctors, civil servants and the super-rich – people who probably would have owned their own homes 40 years ago.”
Some households are choosing to rent because of the “fierce competition to get into top-rated schools” in areas with “unaffordable” property prices. Others “love the area” where they live, but continue to rent because “runaway” house prices prevent them from buying.
But there is also a “fast-growing cohort of ultra-rich tenants”, such as “footballers, celebrities and business titans”, The Times reports, who “typically pay £40,000 a week for some of the most luxurious mansions” in the UK.
The very wealthy often lead a ‘transient lifestyle’ and may not want to invest in a permanent UK base. But “by far” the “biggest” reason for this type of individual rent is the amount of tax they would pay if they bought an equivalent property to the one they are renting, which has “increased exponentially” with stamp duty increases .
https://www.theweek.co.uk/953158/uk-property-market-renting-now-cheaper-than-buying
