According to Halifax’s Owning vs Renting review, the monthly cost of owning a home for first-time buyers comes to £971, which is four per cent lower a month than renting an equivalent property.
The analysis is based on the cost of a mortgage on a three-bed home compared to renting the same property.
The firm said that while this equated to around £500 annual saving, the figure had been falling over the past few years.
The report said that the price gap between mortgage ad renting reached a peak in 2016 at £1,567 annual saving for homeowners, and fell gradually until the pandemic when annual saving in 2019 came to £238.
The saving increased in 2020 to £923 and rose to £1,300 in 2021 before falling to current levels.
Scotland has greatest price gap between renters and owners
The biggest gap between owners and renters could be found in Scotland, where renters paid an average £918 a month compared to £727 for homeowners.
This is equivalent to 21 per cent monthly saving for borrowers.
The South West took second position with the average homeowner paying £1,029, compared to renters who shelled out £1,237. This is a 17 per cent saving for owners.
The North West and Wales both took third place with 16 per cent monthly saving for borrowers.
The East of England was the only region where it was more expensive to own a property rather than rent, as homeowners pay around £90 a month more on average than those renting.
Average first-time buyer deposit nearly £65,000
The report said that the average first-time buyer deposit was £64,598, or around 23 per cent of UK house prices.
Scotland had the lowest first-time buyer average at £33,288 or 17 per cent of average house price in the region.
In England, first-time buyer deposits were lowest in the North East at £31,932, or around 19 per cent of the average property price in the area.
This compares to London where the average first-time buyer deposit was £188,663 or around 32 per cent of average property price.
Homeownership beings savings
Kim Kinnaird, mortgages director at Halifax, said the report showed that becoming a homeowner could “bring significant savings for people”.
“Nationally, homeowners are almost £500 better off than renters each year. These benefits are felt most keenly in London, where homeowners are saving nearly £3,000 annually compared to those renting similar properties – a significant figure,” she explained.
Kinnaird noted that making the move from renting to home ownership was hard for many people due to difficulties in raising deposit and finding the right property.
“While a predicted fall in house prices this year will be welcome news for those looking to buy their first home, it doesn’t change the fact that getting on the property ladder remains expensive – a problem that is compounded when rents are high, impacting the ability to save,” she added.
