Renting now cheaper than owning amid high UK mortgage costs
First-time buyers might be better holding off as renting can be up to over £2,000 per annum cheaper in certain parts of the UK amid high mortgage costs.
Renters are making the biggest savings compared to first-time buyers in the East of England, where they are an average £2,325 better off each year, according to the Halifax Owning vs Renting Review.
Prospective homeowners are being hit by higher mortgage rates and a lack of homes available in the market, which is driving up prices.
Renting in the South East (£1,859), East Midlands (£1,741) and Yorkshire & the Humber (£1,731) also saw significant yearly savings when compared to owning a first home.
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The South West, London and Scotland now the only regions where owning a first home is cheaper than renting. The largest annual savings are in the South West, where the owners are £1,663 better off.
Overall, the monthly cost to first-time buyers of owning a home is now £1,231, only £27 lower than renting an equivalent property. This is the smallest gap between home ownership and renting recorded since 2019.
“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,” Kim Kinnaird, mortgages director at Halifax, said.
“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. This is why we’re major participants and big supporters of the government’s affordable home ownership schemes, such as shared ownership and the mortgage guarantee scheme and we're committed to helping first-time buyers fulfil their dreams of having a place to call their own.”
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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.
If we go back a decade, monthly home-owning costs for first-time buyers have risen 113% and rental costs have gone up 82%.
Propertymark CEO Nathan Emerson said: “We need to see the UK government and the devolved administrations introduce tax incentives to bring landlords back to the market to increase rental supply,”
“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,” he added.
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