It’s now cheaper for first-time buyers to buy than rent

First-time buyers can save 20% when they buy their first home rather than renting, research reveals.

Zoopla says that first-time buyers in Great Britain face average monthly mortgage payments of £1,038 – which is 20% less than the typical rent of £1,248.

The calculation assumes a 20% deposit, amounting to £50,740, on a standard starter home priced at £253,700.

In London, however, affordability pressures push deposits higher, often reaching 30%, as buyers need heftier sums to secure a property.

Challenges facing first-time buyers

Richard Donnell, an executive director at Zoopla, said: “Our renting versus buying analysis is welcome news for would-be first-time buyers looking to buy their first home, having faced steep increases in rents over the last three years.

“There remain challenges facing first-time buyers, especially those on average incomes or with small deposits.

“Mortgage regulations introduced in 2015 to stop a housing market boom and bust have created a higher hurdle to home ownership for those on middle incomes, who can afford to make rental payments but are unable to prove they can afford higher mortgage ‘stress’ rates should borrowing costs increase in the future.”

He added: “The more first-time buyers are priced out of home ownership, the greater the pressure on the private rental market and rental levels.”

Mr Donnell says that a ‘modest’ loosening in lending rules with mortgage stress testing rates closer to 6-7% would help more first-time buyers.

Buying is more economical than renting

Across the country, buying a home is more economical than renting in most regions, save for the East of England, where buying costs 9% more.

The South East and East Midlands show near parity between the two options, while the North East boasts the largest savings, with mortgage payments 24% below rental rates.

Zoopla’s study spans 118 postal districts, uncovering significant disparities.

In Glasgow, the disparity is 36%, Edinburgh it’s 32%), Newcastle first-time buyers save 34% and in Liverpool the figure is 31%.

However, first-time buyers in Harrogate will find that buying their home is 15% pricier than renting, with Watford following at 7% more.

Costs of entering the property market

High house prices in some areas inflate the costs of entering the property market which prevents renters buying – but increases demand for rented homes.

Despite the cost benefits of buying, the platform says that hurdles persist.

Securing a deposit remains a major barrier, varying from £27,700 in the North East to £83,400 in London.

Family assistance plays a key role, with 63% of first-time buyers leaning on relatives for help.

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