Buying A Home

Cheaper to buy than rent in nearly half of Britain’s cities

    • Mortgage payments less expensive than monthly rent in 48 per cent of British cities
    • Buying most cost-effective in Scotland and in the West Midlands – homeowners in Glasgow, Coventry and Birmingham are more than £100 per month better-off than their renting counterparts
    • In the south, however, renting is more cost-effective than buying, with property owners in Cambridge, London, Brighton forking out hundreds more per month
    • Across Britain, renters still pay £59 less per month than buyers

 

Purchasing a property is now more cost-effective than renting in nearly half (48 per cent) of British cities, according to new research from leading property website Zoopla.

Zoopla’s analysis of the cost of renting a two-bedroom home compared to servicing a mortgage reveals that buying now works out cheaper than renting in 48 per cent of cities in the UK on a month-by-month basis, compared to 36 per cent when the data was last analysed in October 2015.

Property purchasers did particularly well when compared to their renting counterparts in Scotland, the West Midlandsand in Northern England. In Glasgow, rental payments amount to an average of £578 per month, whereas monthly mortgage payments only totaled £450. According to these figures, Glaswegian buyers are paying 22 per cent – or £128 a month – less to own their property rather than rent it. In Coventry, the average monthly mortgage payment comes in at £595 – £131 less than the average monthly rent bill of £726.

Conversely, the south of the UK offers much better value-for-money for renters than owners. On average, the annual rental bill in Cambridge comes to £13,248 – almost £10k less than the average homeowner can expect to pay per year in mortgage repayments (£22,476). This is closely followed by London where owning a home costs an average of £15,216 (46 per cent) more per year than renting, and Brighton where owning a property costs £4,812 (29 per cent) more annually on average than renting.

In Britain’s 50 biggest cities, the current average asking rent for a two-bedroom home is £690 per month, while the average monthly mortgage costs £749 to service, and the average asking price is £149,732. As a result, servicing a 90 per cent LTV mortgage typically costs £59 more per month than the average tenant would pay for renting such a property.

Lawrence Hall, spokesperson for Zoopla comments: “Once you get past the initial fees that come with a house purchase, such as a deposit and stamp duty, our figures show that it can pay to try and get on the property ladder. On top of the enjoyment that can come with owning your property, buyers may also find themselves with more disposable income at the end of the month than those renting their homes. Particularly if you’re in Scotland, Northern England or in the West Midlands, taking the first step onto the ladder and sacrificing the flexibility of renting can be a much cheaper alternative.

“In London and the South, it’s largely a different story. Despite the very high rents of London, and relatively high rents of Cambridge, Brighton and other southern cities, getting onto the property ladder is still proving tough. The housing supply pressure in London in particular has become so intense that getting onto the property ladder can be significantly more costly per month than renting.”

Top 10 locations where renting beats buying

Rank Location Median Monthly Rent Median Asking Price Avg. Monthly Mortgage Payment Buying Premium
1 CAMBRIDGE £1,104 £374,500 £1,873 52%
2 LONDON £2,109 £675,000 £3,377 46%
3 BRIGHTON £1,200 £320,000 £1,601 29%
4 SWANSEA £600 £159,950 £800 29%
5 WIGAN £437 £110,000 £550 23%
6 ABERDEEN £752 £185,998 £930 21%
7 READING £1,104 £270,000 £1,351 20%
8 BOURNEMOUTH £826 £200,000 £1,000 19%
9 ROTHERHAM £426 £100,000 £500 16%
10 SOUTHAMPTON £778 £180,000 £900 15%
      Source: Zoopla, March 2016

Top 10 locations where buying beats renting

Rank Location Average Monthly Rent Average Asking Price Avg. Monthly Mortgage Payment Rental Premium
1 GLASGOW £578 £89,973 £450 25%
2 COVENTRY £726 £118,998 £595 20%
3 BIRMINGHAM £752 £125,000 £625 18%
4 BRADFORD £496 £82,450 £412 18%
5 NEWCASTLE UPON TYNE £591 £100,000 £500 17%
6 BOLTON £478 £82,997 £415 14%
7 PETERBOROUGH £661 £115,000 £575 14%
8 NOTTINGHAM £652 £114,725 £574 13%
9 BARNSLEY £452 £80,000 £400 12%
10 STOKE-ON-TRENT £526 £94,000 £470 11%