Gap between buying and renting costs narrows but it’s still cheaper to be on the property ladder

The gap between the cost of buying and renting is now at its lowest for almost a decade, Halifax claims.

Analysis by the lender – based on the monthly costs of a three-bedroom property – found that buyers were saving an average £900 a year compared to renters in 2017, but the latest figures show this saving is down to £366.

This is the smallest savings gap for nine years.

The research compares the typical costs for a first-time buyer such as average mortgage payments, income lost by funding a deposit rather than saving, spending on household maintenance and repair and insurance costs, with rental data from BM Solutions.

There are some limits to the numbers as it doesn’t include upfront costs such as Stamp Duty, valuation and legal fees or anything a renter may pay such as a deposit or tenant fees.

Average monthly buying costs Average monthly rental payment % difference £ difference £ Annual Savings
Dec-08 £871 £616 41% £255 £3,060
Dec-09 £577 £561 3% £17 £204
Dec-10 £575 £605 -5% -£30 -£360
Dec-11 £572 £653 -12% -£81 -£972
Dec-12 £588 £661 -11% -£74 -£888
Dec-13 £613 £692 -11% -£79 -£942
Dec-14 £658 £720 -9% -£62 -£741
Dec-15 £670 £744 -10% -£74 -£886
Dec-16 £707 £759 -7% -£52 -£623
Dec-17 £679 £754 -10% -£75 -£900
Dec-18 £729 £759 -4% -£30 -£366

Home owners are still better off having their own property than renting across the UK, according to the analysis.

The biggest saving is in London, where home owners are spending £4,475 less than renters over a year, followed by Scotland where the savings are at £1,574.

Average monthly buying costs Average monthly rental costs % difference £ difference £ Annual Savings
North £463 £522 -11% -£59 -£705
Yorkshire & the Humber £520 £550 -5% -£30 -£361
North West £551 £681 -19% -£130 -£1,556
East Midlands £607 £684 -11% -£77 -£926
West Midlands £625 £724 -14% -£99 -£1,187
East Anglia £752 £817 -8% -£66 -£788
Wales £536 £621 -14% -£85 -£1,015
South West £775 £882 -12% -£107 -£1,285
South East £1,023 £1,192 -14% -£169 -£2,025
Greater London £1,390 £1,763 -21% -£373 -£4,475
Northern Ireland £443 £475 -7% -£32 -£382
Scotland £509 £640 -20% -£131 -£1,574
UK £729 £759 -4% -£30 -£366

Russell Galley, managing director at Halifax, said: “The gap between buying and renting is narrowing, primarily driven by reduced first-time buyer prices deposits in some regions and continuing house price growth, meaning buyers are paying more on their mortgages.

“With more products available for borrowers, these factors combined have pushed up the price of buying quicker than the price of renting. Meanwhile, the cost of rent, household maintenance and average deposits have remained broadly flat.”

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5 Comments

  1. DASH94

    Renters might make slightly higher monthly payments, but they don’t pay the  maintenance – and that’s not an insignificant figure over 5-10 years.

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    1. Expertinafield28

      The article states that the costs do include maintenance costs.

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      1. DASH94

        I took that to be maintenance costs for the home buyer – not those that are incurred on rental properties.    My mistake if that’s not the case. 🙂

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  2. Northampton Landlord

    Sadly this is propaganda from the money lenders.

    When you rent a property, that is the end of your maintenance costs.

    When you buy a property, that is the start of your maintenace costs.

    All of this is ignored, after all, “Never allow the truth to get in the way of a good story”.

    Not everyone wants to own property and all the costs that go with it.

    People have changed their priorities and home ownership  is just one of them.

    Owner occupier numbers have been declining since 2007 – 8. (Source: Office of National Statistics)

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    1. Home Provider

      Contrary to the propaganda, owner occupier numbers stopped declining in 2014, and by 2017 were back at the 2007 level.  Source Table 4 Dwelling stock by tenure.

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