Cheaper to buy than rent in 1/3 of UK cities

Fresh research from property search firm Zoopla suggests that it is cheaper to buy a property rather than rent in one third of British cities. Buying is also more effective in the north of the country.

Better-off

Mortgage payments were found to be less expensive than monthly rent in 36% of British cities. In Glasgow, home-owners are more than £100 better-off than renters in the city.

However, renting is still more profitable than buying in the south, with home purchasers in London, Reading and Cambridge spending hundreds of pounds more.

Across the nation, the cost of renting a two-bedroom house in comparison to taking out a mortgage showed that renters pay £58 less on average per month than buyers.

In Scotland, buyers faired better than their renting counterparts. Looking at Glasgow again, rents in the city total a monthly average of £596. Monthly mortgage payments however totalled just £447. Glaswegian buyers therefore are paying 25% a month less to own a property rather than rent it.[1]

Southern switch

On the other hand, the South East of the UK gave the best value for money for renters. An average tenant in London pays £2,218 per month in rent, whereas homeowners pay an average of £3,302. This means that buyers are paying 49% more.[1]

Cheaper to buy than rent in 1/3 of UK cities

Typically, buyers in Reading and Cambridge pay more than renters. Property owners in Reading typically pay £3,600 per annum more than tenants, with those in Cambridge paying an additional £3,700.

Nationally, the average asking rent for a two-bedroom house is £666 per month, in comparison to an average asking price of £145,840. What’s more, taking out a 90% LTV mortgage costs £58 per month more than the average tenant would pay if they were to rent the same property.

Leap of faith

Coupled with the peace of mind that owning a home brings, a large number of homeowners have more disposable income at the end of the month than their renting counterparts, according to Lawrence Hall of Zoopla.

Hall said that if would-be homeowners, ‘can make the leap and are willing to relinquish the flexibility that comes with renting, tenants up north in particular would be much better off buying and paying off a mortgage every month.’ In addition, he noted that Scotland and the North of England are now international university hubs, with excellent universities in York, Edinburgh and Durham. This, Hall says, ‘means increasingly high numbers of students are flocking to these areas, all looking for places to stay and driving up rents as a result.’[1]

Concluding, Mr Hall observed that London and the South East are certainly not cheaper places to rent. However, he did say that, ‘growing pressure on housing supply in this corner of the UK from professionals, families and overseas investors means that getting a foothold onto the property ladder in these areas is only becoming a more costly endeavor and the mortgage payment attached to this are rising to bridge this gap.’[1]

[1] http://www.propertywire.com/news/europe/uk-renting-buying-property-2015101211082.html