Buying is cheaper than renting in 90% of 50 towns in Britain. On average, renting in Britain costs £1,080 per year more than buying.
The research by Zoopla shows that in York, Peterborough and Reading, the most expensive places to rent outside of London, it is cheaper to buy, while it is cheaper to rent than to buy in Swansea, Cambridge and Bournemouth.
According to Zoopla, the average asking rent for two-bedroom flats nationally is currently £668 per month, while the average asking price to buy equivalent properties stands at £138,769, costing £578 per month in mortgage costs.
However, Zoopla’s sums are done on the basis of servicing an interest-only mortgage – and interest-only mortgages are rapidly becoming a thing of the past. A number of lenders have closed their books to new interest-only borrowers, citing a fall in demand.
Zoopla also does some sums using a 90% LTV interest-only rate, whereas many purchasers of a two-bedroom flat at under £40,000 would be first-time buyers who typically will need a 20% or 25% deposit.
However, were a borrower able to get a 90% interest-only mortgage at 4.39%, the average mortgage on a two-bed flat would stand at £124,892, costing £457 per month, saving the average owner £2,532 per year.
David Sansome of Sansome & George said: “Whilst this report, on one level, shows the relatively high cost of renting vs buying, there are other factors that are important such as the higher costs of acquiring a property to buy and the greater flexibility afforded by renting.
Whilst monthly costs often are a key factor in a decision over whether to buy or rent they are by no means the whole story.
We are always pleased to advise anyone as to the various options open to them.”