Owning a home now cheaper than renting in UK
Tuesday 7th of February 2012
If you rent your property then you will be £1,400 worse off than someone who owns their home, according to a new study.
Falling house prices, cheaper mortgages and increases in rents now mean that it is significantly cheaper to own than to rent your home. Keep reading to learn more.
Falls in mortgage rates and rise in demand for rental property have increased gap
The research from Halifax found that it is now almost £1,400 per year more expensive to rent a house than it is to buy. Mortgage rates dropped from an average of 5.75 per cent in 2008 to 3.63 per cent in 2011, while house prices have fallen by 11 per cent over the same period. These factors have reduced the costs of home ownership.
The Daily Mail reports that ‘recent mortgage deals mean you can typically pay £600 a month for a three-bedroom house – £116 cheaper than the average rent of £716.’
The gap between the cost of renting and buying increased significantly in 2011 and is expected to rise further in 2012 as people continue to struggle to get onto the housing ladder. There has also been a strong demand for rented property which has pushed up the cost for tenants.
Martin Ellis, housing economist for Halifax, believes that affordability for buyers has increased more than that for renters. He said: “The affordability gains for buyers relative to renters in the last three years have been significant. The average mortgage payment has fallen dramatically over recent years as a result of falling house prices and mortgage rates.
“At the same time, rents have risen due to strong demand for rented accommodation.”
The Mail reports that ‘Wales is the only area of the Uk where it is cheaper to remain a tenant, with owning a home costing £5 a month more than renting.’
