View more on these topics

Buying is £100 a month cheaper than renting

Buying a home works out over £100 a month cheaper than renting in the UK, according to research by Halifax.

The Halifax Buying vs. Renting Review shows that the typical monthly cost of buying a three bedroom house was £600 in December, 16% cheaper than the average monthly rent of £716 on the same property type.

The review tracks changes in the cost of buying and renting property, taking into account mortgage payments, income lost by funding a deposit rather than saving, spending on household maintenance and repair and insurance costs into buying costs.

It is based on data from Halifax’s own database, as well as figures from Birmingham Midshires, the Bank of England and the Office for National Statistics.

The research shows that home buying costs have fallen by more than a quarter, or £328, since 2008, driven by a fall in the average monthly mortgage rate from 5.75% to 3.63%, as well as a drop in house prices.

In 2008, the average cost of buying was 29% higher than the cost of renting.

And between 2010 and 2011, buying costs have fallen by 5% while renting costs have risen by 5%.

Buying a home was more cost-effective than renting in 11 out of the 12 UK regions in December 2011, with Wales being the only region where renting remains cheaper than buying.

Martin Ellis, housing economist at Halifax, says: “The affordability gains for buyers relative to renters in the last three years have been significant. The average mortgage payment has fallen dramatically over recent years as a result of falling house prices and mortgage rates.

“At the same time, rents have risen due to strong demand for rented accommodation.”

But he adds that despite this, the number of purchasers has continued to fall due to ongoing challenges in raising a deposit and uncertainty over the economy and housing market.

Recommended

Lending data belies fears of recession

Welcome to the first Lending Zone of 2012 and the year is already shaping up to be a bumpy ride. With gross domestic product falling by 0.2% in Q4 many are predicting further quantitative easing in February and saying that the UK is already in recession.

Fears of double-dip recession rise after 0.2% contraction in GDP

Gross domestic product contracted by 0.2% in Q4 2011, sparking fears that a double-dip recession could be on the way. The contraction marks a sharp slowdown on the 0.6% rise in the previous three months of 2011. If Q1 2012 also contracts, the UK will fall back into recession. Ben Thompson, managing director of Legal […]

The Perils of Passive Investing

The era of loose monetary policy created an environment that rewarded passive investors in the US. However, with the US raising interest rates for the first time since 2006, Felix Wintle explains why he believes active investing will be more important than ever. In the video Felix discusses: The rising cost of capital and its […]

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments
  • Post a comment
  • Phil Shelford 31st January 2012 at 2:13 pm

    add the fact that too many borrowers are trapped on svr as they no longer fit with only one way that rates can go and a time bomb is ticking for home ownership. Also when buying do people really factor in the essential maintenence of a property. if you rent its the landlords responsibility.

  • Agreeable 31st January 2012 at 8:12 am

    Well said, of course after all those assumptions, you’d be wrong to think that Halifax would lend you the amount required!
    Which means your back to where you started! And if prices are falling very slowly which they are, then you are better renting until things get better! 2017!!! 🙂

  • AA 30th January 2012 at 4:59 pm

    Jonathan and detached are wierd.

    I get the story within the headline only, and it is cheaper buying then renting in some parts of the country. Its ‘monthly’ stats.

    Get stacking them shelves.

    PS If you do wish to write back that you’ve been doing the day you was born blah blah blah, then so be it but at least be positive in life.

  • detached 30th January 2012 at 4:05 pm

    These figures are rubbish.
    Assuming a 90% LTV mortgage at 4.5%, a monthly repayment of £600 per month will service a £110,000 loan.
    Adding the 10% deposit, this gives a total figure of £122,000 for a three-bedroom house !

    Can please someone tell me where in the UK I can buy a 3 bedroom house for £122,000 and get a job paying £31,500 so I can get a £110,000 mortgage (assuming of course I have a £12,000 deposit)??

  • Jonathan Burridge 30th January 2012 at 3:58 pm

    Oh please MS, where is the story?

    Did Halifax’s calculation take into account the capital outlay required to purchase? What loan to value asuumptions did they make? Average. that word again!! define average.

    I note that Halifax talk about the challenges in raising a deposit and consumer uncertainty, what about the challenges in convincing a mortgage company to approve a loan?

    Forgive my cynicism, but I doubt it.