Renting Costs £100 a Month More than Buying the Same Home

Renting Costs £100 a Month More than Buying the Same Home

16:09 PM, 27th January 2012, About 12 years ago 4

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Buying a house is still £100 a month cheaper than renting – if you have a credit rating and the cash for a deposit that a mortgage lender demands.

The average monthly cost of buying a three-bedroom house is £600 per month, while average rent on the same property is £716, according to The Halifax.

The figures were taken from the bank’s lending figures and official databases in December.

The cost of buying has dropped significantly over the past three years, mainly due to falling interest rates.

The mortgage rate for new borrowers has fallen to an average 3.63% in 2011, from 5.75% in 2008. Average house prices dropped 11% over the same period
In 2008, buying was 29% more expensive than renting, consuming 47% of monthly income. In 2011, home buying costs made up 29% of incomes.

Despite higher costs, the bank says buying is still 10.2% cheaper than renting in London.
Wales is the only region in the UK where buying is more expensive than renting.

Home buying is more expensive – with increasing estate fees, stamp duty rises and the bigger deposits demanded by lenders all contributing to a fall in the number of house purchases.

Martin Ellis, housing economist at Halifax, said: “The affordability gains for buyers relative to renters in the last three years have been significant. The average mortgage payment has fallen dramatically over recent years as a result of falling house prices and mortgage rates.

“At the same time, rents have risen due to strong demand for rented accommodation.

“Despite the improvement in the relative affordability of buying a home, the number of purchasers has continued to fall due to the ongoing challenges in raising a deposit and the considerable uncertainty over the prospects for the UK economy, which have severely constrained housing demand.”

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17:13 PM, 27th January 2012, About 12 years ago

One way for the govt to assist  and get the economy moving again is to provide everyone with a certain amount of assisted deposit to buy any sort of property.
Govt would apply 2nd charge to the title so that thaey would be paid back when the property was sold.
This would be a far better way of using QE; which the banks then sit on; not lending it out but just bolstering their balance sheet, serving no use whatsoever.
QE is meant to free up credit but the banks are refusing to lend but still taking the govts money, but doing nothing with it.
Why doesn't the govt just bypass the banks altogether.

Mark Alexander - Founder of Property118

17:22 PM, 27th January 2012, About 12 years ago

Money from Quantative Easing doesn't go to the banks Paul, I think you may be mixing that up with bank bail-outs.

The money required to do what you have suggested just wouldn't be available and if it was it would de-stabalise the housing market.

Next week I will be releasing an article I've been working on for some time. It will bullett point many of the housing issues that you have been commenting upon and clearly demonstrate what a cock up the government and the Councils are making in their attempts to solve the housing crisis.

It won't just be critique though. I will also be offering solutions for affordable housing which will solve many of the financial and social issues that have been eported here. rest assured though, it will not involve housing all under 35 single benefit claiments and students in unsed prisons or anything quite as extreme as some of the other suggestions we've seen here either.

Mary Latham

20:04 PM, 27th January 2012, About 12 years ago

Many of my tenants tell me that they choose to rent rather than buy.  The reasons for this vary but young couple like to financial freedom that renting allows them and professionals often tell me that they are on short term contracts and by renting they are able to take up job offers and relocate quickly.

As we all know the purchase cost is only part of the cost of owning property and service charges for flats, repair and replacement costs, furniture and furnishing add considerably to the bottom line.

Have you ever calculated the daily cost of living in your own home - very scary. I have not owned by own home for many years, despite being a landlord, my home is owned by my limited company and this makes financial sense. I enjoy the benefits of being a tenant

23:31 PM, 27th January 2012, About 12 years ago

Indirectly the money does go to banks as it buys up their debt bonds etc leaving them to relend the money.
But they don't lend  and we have no housing market at present stable of not.
Everything has frozen up
If the govt can offer deposits for new-build then why not pre-owned properties.
However your article will I'm sure be of great interest; let's hope the powers that be might take interest in someone who has been and is engaged in the industry for many years.

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