Mortgage News
Buying cheaper in 80% of towns
The cost of owning a home is cheaper than renting in 80% of Britain’s towns and cities, according to Zoopla.co.uk.
Its research revealed that the difference in cost has been rising steadily since the middle of last year, when renting was 8.7% more expensive.
Zoopla.co.uk figures showed that tenants are paying on average 10.5% more in rent than a homeowner spends to service an interest-mortgage with an interest rate of 5%.
Nevertheless, it noted that, if interest rates were to increase by 1% and rents remained the same, renting would become more cost-effective in 78% of locations.
Zoopla.co.uk looked at the asking prices of two-bedroom flats for sale in the 50 largest cities and towns around the country and the subsequent mortgage payments.
The cost of renting was significantly higher in several cities, with Milton Keynes, Walsall and Birmingham showing the largest differences.
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Milton Keynes rents were on average 42% higher than mortgages at £785, meaning renters would pay £2,772 more a year than a homeowner. Walsall and Birmingham rents were 38% and 35% higher than mortgages respectively.
Zoopla.co.uk found that a further nine of the 50 towns and cities had average rents that exceeded mortgage payments by more than 20%.
London was also cheaper to rent than buy, despite the high price of housing. Average rents in the city are £2,252 per month with buyers saving on average £4,656 a year.
However, Plymouth was one location that proved cheaper to rent than buy, with average rents coming in at £71 cheaper than buying. Zoopla.co.uk said this was down to the large supply of buy-to-let properties in the area putting downward pressure on rents.
Nicholas Leeming, business development director of Zoopla.co.uk, said: “While lenders maintain their vice-like grip on the mortgage market, more and more would-be buyers are forced to rent instead of getting onto the housing ladder.
“Rents will likely rise further as a result and renters will continue to pay a significant premium for being stuck in the sector.”