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Renting more expensive than buying in 8 out of 10 British cities

The research looks at the current asking prices and rents of two-bedroom flats around the country and assumes interest-only mortgage payments of 5% p.a. to provide a comparison to the cost of renting.

The range of results by location provides some very interesting insight into where it is best to rent instead of buy and vice versa. Milton Keynes tops the list of places where renting is the far less attractive option with average rents exceeding the cost of servicing a mortgage by a staggering 43%, leaving renters there on average £2,964 per year worse off compared to owners.

At the other end of the scale, it is currently much more cost effective to rent in Poole than buy with renting 27% cheaper and the average tenant better off by £3,240 per year by renting instead of buying.

Even in London, which has by far the highest property prices in the country and where the average 2 bedroom flat is going for £431,366, buying is still 16% more cost-effective than renting.

With average rents at £2,137 per month in the capital versus an average cost of a 5% interest-only mortgage at £1,797 per month, renters pay an extra £4,080 annually compared to owners.

Nicholas Leeming, business development director of Zoopla.co.uk, said:

“The relative cost of renting as opposed to buying has increased over the past 12 months as rents have risen and house prices and interest rates have remained flat. Almost 750,000 would-be first-time buyers have reluctantly ended up as renters over the past 3 years as a result of being unable to get a mortgage. With current house prices and interest rates where they are and with rents on the rise, for those who can get a mortgage, there may never have been a better time to buy.”

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2 thoughts on “Renting more expensive than buying in 8 out of 10 British cities

  1. Alan Cooper says:

    With buying working out cheaper the renting first time buyers should be flooding the market.
    but with mortgages being a stumbling block in so many cases the savings on buying vs renting can seem out of reach.
    However mortgage products are getting better and more availability is out there.
    Now is a good time to buy, there maybe slight ups and downs in property values but this would be off set by the saving against renting.
    Also choosing the right property and good negotiations at the start will all add to the value of the deal.
    Home Search Consultancy is a professional Home Finder who does a lot of work for first time buyers. You can contact us by email moveme@homesearchconsultancy.com
    Kind Regards
    Home Search Consultancy

  2. Assetz Homes says:

    Totally agree with you Alan; now is a great time for first-time buyers to get their foot on the property ladder, especially with an increasing number of great mortgage deals, specifically for first-time buyers. The problem we have is, that first-time buyers are so used to hearing negative press about the market, that they are scared to even apply for a mortgage, as they fear they will be knocked down at the first hurdle.

    We need some more positive press, and the first-time buyers will start to come out of their shells and apply for mortgages.

    With rental prices increasing, and low LTV mortgages appearing, first-time buyers need to do everything they can to ensure they get on the first rung, whilst the opportunity is still hot.

    For first-time buyer advice and mortgages visit http://homes.assetz.co.uk/

    Jacey Coates

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