The ongoing shortage of accessible mortgages and the fall in wages in real terms has created difficulties for first-time buyers resulting in a rise in demand for rental properties and pushing up average rents across Britain. It now costs 14% more per month on average to rent a home compared to servicing a mortgage on an equivalent property.
The average rent across Britain now stands at £1,785 per calendar month – up 2.7% since February. Milton Keynes, Dundee and Stoke-on-Trent top the list of places where owning beats renting by a large margin. At the other end of the spectrum, in Aberdeen, Bournemouth and Swansea renting is by far the better option from a cost perspective.
In London, renting is 21% more costly on average than servicing a mortgage with the average asking price for a 2-bedroom flat in the capital currently at £474,979 and the average rent on an equivalent property at £2,500 per month. With an interest-only mortgage at 5% p.a., owners are £6,250 per year better off than renters in the capital.
Nicholas Leeming of Zoopla.co.uk, said: “The climbing cost of renting is exacerbating the problems the property market currently faces. Higher rental costs leave less disposable income for renters to save for deposits. The problem will only ease if rental prices fall or mortgage availability improves dramatically, leaving the ball is firmly in the court of Britain’s lenders.”
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