RENTING VS BUYING
ESCAPE THE RENT TRAP
Buying your own home rather than renting can save you more than £100 a month, reveals a new report Each year, Halifax releases its Buying vs Renting Review, which aims to discover which is the most cost-effective option – renting a home or paying a mortgage and all the associated costs of owning a home. This year’s report shows that those who choose to buy will be better off by the largest amount since 2017, saving £114 a month on average. The report found that across the UK as a whole, annual homeownership costs were £1,378 cheaper than renting in 2021, although this varied depending on area. The smallest difference was found in Northern Ireland, where buyers were just £205 better off at the end of the year than renters, while Londoners were a massive £4,181 (20%) better off buying than renting. In the South East, the saving was £3,146 (20%), followed by £2,081 in the North West (22%) and £2,034 (17%) in the South West. For buyers in Scotland, the saving was also a massive 22%, although in monetary terms it was slightly lower at £1,817 thanks to lower house prices. The figures are based on the housing costs associated with buying a three bedroom home, compared to the average monthly rent for the same property. For
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buyers, it takes into account mortgage payments, household maintenance, repairs and insurance costs, as well as the income lost by putting your savings down as a deposit (although it doesn’t factor in any capital gains in the value of the home). The resulting difference can vary widely from year to year, depending on how these costs, and average rents, change. Having narrowed in each of the past three years, the gap is now at its widest since 2017, and is over £1,200 greater than its historical low in 2019 (when buying meant a tiny £116 annual saving). However, the current difference (£1,378) is not as great as in 2015, when annual ownership costs were £1,476 less than those for renting. The study also looked at deposit costs, and found that, as a proportion of house price, deposits rose only marginally from 24% in 2020 to 25% in 2021. In cash terms, however, thanks to rising house prices, that meant buyers finding £5,334 extra, with the average deposit reaching £62,415. This too varies vastly by region – Londoners put down an average 33% deposit of £173,021, while in the North, the average is a 21% deposit of £31,995. Esther Djikstra, Mortgages Director at
Halifax, said, “Over the past year, we have seen record numbers of buyers entering the market, moving to bigger properties and taking advantage of the Stamp Duty holiday. However, historic lows for interest rates have kept mortgage costs down, compared to rents. For the second year running, buyers in Scotland see the greatest proportional difference in costs compared to renters and are joined this year by those in the North West of England, where rents are over a fifth more than buying costs. “Still, before homebuyers can benefit from lower monthly costs, a deposit needs to be put together, still the greatest challenge for many first time buyers. The £62,000 average deposit we see in our data may be an unimaginable sum to potential first time buyers, but it’s much higher than many need to get a foot on the housing ladder. Deposits from 5% are available and, based on the average house price, mean putting down a £12,500 deposit – significantly less than the average.” Take a look at the following properties we have selected, where you can get on to the housing ladder with a lower-thanaverage deposit, and save money every month over renting.
First Time Buyer June/July 2022
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