It’s now cheaper to rent than buy across nearly every region in the UK with monthly home-owning costs for first-time buyers having risen 113% in the last decade compared to just 82% for renting.
The South West, London and Scotland are now the only regions where owning a first home is cheaper than renting, latest data from the Halifax Owning vs Renting Review reveals.
The East of England has widest gap, with renters £2,325 better off annually, compared to owning an equivalent home.
And the monthly cost to first-time buyers of owning a home is now £1,231, -£27 lower than renting an equivalent property – the smallest gap recorded since 2019.
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 home-owning costs grew by 27% to £1,231.
BETTER OFF
Kim Kinnaird, Halifax MortgagesKim Kinnaird, Halifax Mortgages Director, 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.
“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.”
Nathan Emerson, Chief Executive of Propertymark, says: “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.
Nathan Emerson, Propertymark“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.
“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.”
NO CLIFF-EDGE
Tom Bill, head of UK residential research at Knight Frank, adds: “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.
“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.”
