Renting is now cheaper than buying

Renting is now cheaper than buying

0:04 AM, 22nd August 2023, About 8 months ago 1

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Rising mortgage rates mean that renting a home in the UK is now a more cost-effective option than buying a home for the first time since 2010, one analysis reveals.

The findings from Zoopla highlight that the average monthly rent is now £1,163, while the average monthly mortgage payments for first-time buyers, considering a 15% deposit, amount to £1,285.

The regions most adversely impacted by the surge in mortgage costs compared to rental rates are London and the South East.

However, it is still cheaper to buy a home in northern England and Scotland than it is to rent.

‘Low mortgage rates have made buying cheaper than renting’

Zoopla’s head of insights, Richard Donnell, says that low mortgage rates have made buying cheaper than renting for the last 10 years – but the trend has now reversed.

He told the BBC: “Around the country, the picture varies as in areas with lower house prices buying is still cheaper than renting.

“In southern England where prices are higher, access to home ownership is most out of reach and rents are high as well.”

He adds that housing unaffordability in southern England will be a problem for first-time buyers and renters.

Mr Donnell also predicts that mortgage rates will fall but rising rents will see buying becoming cheaper than renting later this year once again.

Two-year fixed-rate mortgage now stands at 6.76%

Moneyfacts says that the average two-year fixed-rate mortgage now stands at 6.76%, while the rate for a five-year fixed deal is slightly lower at 6.24%.

This sharp increase in mortgage rates is in stark contrast to that seen in early 2021, when both two- and five-year fixed mortgage rates were well below the 3% mark.

Zoopla says the average monthly rent is £122 cheaper than a monthly mortgage repayment.

The platform based its calculation on the average property price of £263,000 where a first-time buyer had put down a 15% deposit of £39,500.

It then worked out what the average monthly mortgage payment is compared to the average rental cost to reach its conclusion.

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10:38 AM, 22nd August 2023, About 8 months ago

I don't see any comparison between the maintenance costs faced by renters and homeowners. Oh, wait! Renters don't have any of those responsibilities and costs!

I have a water leak under my drive, and part of my electrics keep tripping for no apparent reason, just as I've accepted an offer to sell at a good price. Not covered by the water company or insurance. The cost is one thing renters don't have to worry about, but the stress and work to get it fixed is significant.

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