Rent freedom day comes later than mortgage freedom day

The cost of renting in England is highlighted by figures from the Halifax revealing that across the country it takes longer to reach “rental freedom day” than it does to reach “mortgage freedom day”.

On average, mortgage borrowers would have earned enough to pay off their annual mortgage by April 19, compared to May 5 – yesterday – for renters, a day later than in 2015.

The research found that property owners spend 29% of their average disposable income on their mortgage, compared to 34% by tenants.

The figures use average rents, house prices, average net annual income and mortgage rates, and show that renting is more costly than buying in all but one area.

For Londoners who rent, it takes more than half the year to reach the milestone, at 195 days. They will have to wait until July 13 to earn enough to cover their rent for the whole year. It takes home owners in the capital until June 26 to cover the cost of their annual mortgage.

In contrast, those renting in the north-east take less than half the time to cover annual rental costs, 96 days, being rent-free by April 5.

Rental freedom day doesn’t arrive in the south-west of England until May 22, taking 143 days of earning. The south-east is slightly less at 137 days, May 16, followed by the north-west at 122 days on May 1.

After the north-east the areas with the shortest periods are Yorkshire & Humber at 100 days, April 9, the east midlands at 104, April 13, the west midlands at 112, April 21, while in the east of England it takes 113 days with rental freedom arriving on April 22.

Craig McKinlay, mortgage director at Halifax, said: “For most home owners, mortgage payments are the biggest outgoing every month; knowing they’ve earned enough to pay off their mortgage for another year should be a reassuring thought.

“On the other hand, those who rent will need to work a further couple of weeks to have earned enough to cover their annual rental cost.”

In Scotland and Northern Ireland, home owners clear their annual mortgage by March 12, in Wales it’s April 1 and in England annual mortgage costs are cleared by April 29. There is no data available for renting in Scotland, Wales and Northern Ireland.

Rental Freedom Day is calculated using annual rental payments as a percentage of average disposable earnings.

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