New research has revealed that the gap between renting a property and owning one has reached a four year high.
According to Halifax data, the average cost of buying a three-bedroom house including mortgage payments was £679 a month at the end of last year. This is £75 less than the monthly rental costs for the same kind of property, which stood at £754 in December 2017.
The growth in the gap between buying and renting, which has been attributed to a fall in mortgage rates, has risen by 44% year-on-year. This equates to an average saving of £900 per annum.
On a regional basis, those seeing the most significant monetary savings are in London at a yearly average of £2,191. This can be compared with those in Yorkshire & the Humber who are saving around £589 each year.
Looking at the figures proportionally, those making the greatest savings are in the South West and Scotland; here, renting is 17% more expensive than buying.
Over a ten year period, the average cost of rental payments month on month has risen by 22%, whilst the average cost of buying has fallen by the same percentage.
Commenting on the figures was Russell Galley. The Managing Director at Halifax stated: “The gap between buying and renting has widened significantly, primarily driven by a reduction in mortgage rates and a more competitive market pushing down monthly payments. Meanwhile, the cost of rent, household maintenance and average deposits have remained broadly flat.
“Despite having to put down a sizeable deposit up front, homeowners are overall better off than renters in all parts of the UK. But those who are unable to get onto the property ladder because they can’t raise enough cash are paying more by renting.
“The good news is that record numbers of first-time buyers are still taking their first step on to the ladder and helping to bridge this gap thanks to a continued low-rate environment and government schemes including Help to Buy.”
