For first time buyers, renting is cheaper than buying in most of the UK according to new data from the Halifax.
London, the South West and Scotland are the only three regions of the UK where renting remains the costlier option, when looking at monthly outgoings. The largest annual difference is in the South West where owners are £1,663 better off than renters.
Otherwise, renting is cheaper and in some of the regions it’s well over £100 cheaper per month less expensive according to the lender’s latest Owning vs Renting Review.
Renters are making the biggest savings compared with first-time buyers in the East of England, where they are an average £2,325 better off each year. Renting in the South East (£1,859), East Midlands (£1,741) and Yorkshire & the Humber (£1,731) also involve substantial savings over ownership.
The cost of buying a home has surged as mortgage rates rocketed within the last 18 months, while home purchase prices have dipped but not crashed.
Kim Kinnaird, mortgages director at Halifax, says: “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.”
In response to the findings, agents’ trade group Propertymark says: "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 per cent increase in rental properties coming to the market, and an 80 per cent 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.”
This article is taken from Letting Agent Today