New Halifax data has been released this morning showing that renting is now cheaper than owning a first home in nearly all UK regions.

The latest Halifax Owning vs Renting Review shows that the gap between the costs of home ownership and renting has reached its smallest level since 2019.

The Owning vs Renting Review from Halifax found the typical monthly cost to first-time buyers of owning a UK home is now £1,231, £27 lower than renting an equivalent property.

The analysis, based on the housing costs associated with a mortgage on a three-bed home compared to the average monthly rent of the same property type, found that monthly rental costs in 2023 grew by 24% to £1,258, while homeowning costs increased by 27% to £1,231.

But on a regional basis, the monthly cost of owning a first home compared to the equivalent rental cost, was higher in nine out 12 UK regions or nations last year.

Kim Kinnaird, mortgages director at Halifax, said: “Our latest analysis shows that, in nearly all regions across the UK, first-time buyers are better off renting than owning a similar home. In fact, the only regions where it’s cheaper to own rather than rent, are the South West, London and Scotland.

“We know home ownership can offer long term financial and living stability and that’s why we believe it’s an important step to take.

“Our customers want to create a secure future, so it’s a big priority for us to help people get there. However, elevated borrowing costs, alongside a lack of available homes to buy, is pushing ownership further out of reach for would-be first-time buyers in many parts of the country.

“This is why we’re major participants and big supporters of the Government’s affordable home ownership schemes, such as shared ownership and the mortgage guarantee scheme and we’re committed to helping first-time buyers fulfil their dreams of having a place to call their own.”

Reflecting on the Owning vs Renting Review, Tom Bill, head of UK residential research at Knight Frank, commented, “There has been no cliff-edge moment for house prices despite borrowing costs rising sharply over the last two years. The prevalence of fixed-rate mortgages means any financial pain is entering the system in a staggered way. Lenders are also in a much stronger position than during the financial crisis, which means no wave of foreclosures to drive down prices. While the strong labour market is one reason inflation has remained stubbornly high, it has also underpinned buyer demand.

“The story of the last two years has been a slowdown in transactions not prices, which has made renting a cheaper option in some areas, even though the lettings market has suffered from a lack of supply. Given that housing will be one of the issues taking centre-stage at the election, it would be surprising if the government failed to offer any help to first-time buyers.”

Also responding to the Halifax report, Nathan Emerson, Propertymark CEO, said: “We are currently seeing upbeat news with regards to renting and buying homes, as highlighted by Propertymark’s most recent Housing Insight Report, which found that there has been a 29% increase in rental properties coming to the market, and an 80% boost in new properties for sale. However overall, there is still much work that needs to be done to make housing more affordable across the entire UK.

“Rental costs have surged in recent years and various governments across the UK have a duty to support the creation of a sustainable mix of properties within the rental sector. Mortgage tax relief was scrapped in 2015 and this created a situation of landlords unwillingly being forced to pass increased overheads onwards to consumers. Rent caps in Scotland and Wales have also caused considerable issues and have ultimately contributed to sharp increases in rents for many too. We need to see the UK Government and the devolved administrations introduce tax incentives to bring landlords back to the market to increase rental supply.

“Attention needs to be paid to housebuilding targets and further support for first time buyers. With inflation now nudging back down, Propertymark is extremely keen to see a reduction in interest rates as soon as possible to help uplift consumer confidence and affordability within the sales arena.”