The monthly cost of owning a home for first-time buyers is now £971 – £42 (4%) lower than the cost of renting the equivalent property, according to the latest Halifax Owning vs Renting Review.

The analysis, which is based on housing costs for first-time buyers with a mortgage on a three-bed home compared to the average monthly rent of the same property type, found that the £971 owners are now paying, compares to £1,013 for renters, each month.

While still equating to an almost £500 saving per year for owners, the gap is down from its peak in 2016, when owners were saving £1,567 annually.

The UK’s greatest gap between owners and renters, in percentage terms, can be found in Scotland. Those renting in the nation pay an average £918 per month, compared to £727 for home-owners – a saving of 21% for those on the property ladder.

It is a different story in the East of England, the only region or nation in the UK where it is more expensive to own a property than rent the equivalent. Homeowners there now pay £90 more each month, on average, than those renting.

Kim Kinnaird, Mortgages Director, Halifax said: “Our latest analysis shows that becoming a homeowner can bring significant savings for people. Nationally, homeowners are almost £500 better off than renters each year. These benefits are felt most keenly in London, where homeowners are saving nearly £3,000 annually compared to those renting similar properties – a significant figure. In fact, the only region where it is cheaper to rent than own is the East of England, where renters are holding onto £90 each month, compared to owners. 

“Of course, making the move from renting to home ownership can be difficult for many, as raising a sufficient deposit and then finding the right property can be challenging. While a predicted fall in house prices this year will be welcome news for those looking to buy their first home, it doesn’t change the fact that getting on the property ladder remains expensive – a problem that is compounded when rents are high, impacting the ability to save.”

The latest first-time buyer data from Halifax shows that, in cash terms, deposits being raised in the North East are the lowest in the UK – at £32,920, around 19% of average property prices in the area. Outside of London – where those buying a first home are raising a huge £188,663 on average – properties in the South East and East of England also require hefty deposits from new home owners, at £97,320 and £87,157 respectively. 

Reflecting on the latest data, Tom Bill, head of UK residential research at Knight Frank, said: “To the frustration of tenants, rents are likely to stay higher for longer this year due to resilience of the sales market, which means more asking prices are being met and fewer owners are becoming landlords. On top of that, landlords are still exiting the sector due to tax changes in recent years and the prospect of more to come. Policies that attract landlords and are built on the principle that higher supply means lower rents would alleviate some of the pain for tenants.”

With a focus on London, Matthew Thompson, head of sales at Chestertons, added: “London’s lettings market is extremely competitive which can drive up rents and make home ownership a financially more appealing option in the long term. Particularly in the face of inflation, we encounter renters who are reviewing their options and weighing up the pros and cons of renting versus owning.

“The monthly payments on a mortgage tend to be lower than the monthly rent payments of the equivalent property in London. Due to the capital being one of the most challenging markets to buy a property in, we always advise clients to review their situation carefully and ensure that they are ready to make the step on the property ladder. In addition to mortgage payments, we urge to also take into account additional monthly fees that can come with home ownership such as annual service charges.”