Where buying is cheaper than renting in the UK

Getting onto the property ladder may be more achievable than many first-time buyers realise, data from Lloyds reveals.

The bank says that buying a home with a 5% deposit is typically 17% cheaper than renting, even with higher mortgage rates.

The findings compare average rent payments with first-time buyer mortgage costs in 11 major UK cities outside London.

In nine of them, ownership works out more affordable month to month, saving buyers thousands each year while also helping them build equity.

Can be cheaper than rent

The bank’s head of mortgages, Amanda Bryden, said: “There’s no doubt it’s a challenging landscape for first-time buyers, with both property prices and interest rates higher than they were just a few years ago.

“But buying a home remains one of the best long-term financial decisions most people will ever make.”

She added: “It’s not just cheaper than renting in the short-term, as the impact of growing equity in your own home – money that would otherwise have been lost in rent – means a more secure financial future.”

How much buyers save

According to Lloyds, the average 5% deposit required by first-time buyers is now £11,412, based on a typical purchase price of £228,233.

The research calculates repayments on a 4.78% five-year fixed mortgage over a 30-year term.

For many first-time buyers, the biggest obstacle remains saving for the initial deposit, with 67% of prospective homeowners saying it’s their main challenge.

However, 45% of would-be buyers who have started saving already have £10,000 or more set aside, bringing homeownership within reach in several cities.

The cheapest FTB cities

Glasgow tops the list for savings, where mortgage payments are about 32% lower than renting, that’s a potential saving of £396 a month or £4,752 annually.

With the average first-time buyer property valued at £172,000, a deposit of just £8,600 could be sufficient to buy.

In Newcastle, monthly mortgage payments average 20% less than rent, saving around £217 a month or £2,604 per year.

A 5% deposit on a £180,000 property would amount to £9,000.

Nottingham offers potential with buyers saving roughly £86 per month, or just over £1,000 annually, compared to renting.

A 5% deposit of £9,150 would be needed on an average £183,000 home.

Helping first-time buyers

Mary-Lou Press, the president of NAEA Propertymark (National Association of Estate Agents), said: “While low-deposit mortgage products are helping more first-time buyers access the property market, many still face significant upfront financial hurdles.

“Recent changes to Stamp Duty in England and Northern Ireland mean that some first-time buyers will also now have additional tax to pay.

“Beyond the deposit and any relevant property tax, buyers must also budget for solicitor fees, mortgage arrangement charges, valuation and survey costs, local authority searches, moving expenses, and insurances.”

She adds: “That said, in some areas, we are seeing that monthly mortgage repayments can still be lower than local rents, especially for buyers securing competitive rates.

“First-time buyers need to go in with a clear understanding of both the upfront and ongoing costs of ownership to make an informed decision.”