In Many Areas, Renting is Now Cheaper Than Buying

A landmark study has revealed renting is often cheaper than purchasing a property. That is the stark truth gleaned from data collected by Santander in evaluating the relative costs of renting versus buying across the country.  London came top of the table when the average monthly rent and average monthly mortgage payment were compared. With an average rent of £4,569 per month and an average mortgage payment of £1,280 per month, this equated to a saving of £3,468 per year if someone swapped from renting to owning their own home.  Northern Ireland proved to be the next cheapest area, where swapping from renting to home ownership was found to generate average annual savings of £2,136. In third place was the North West, with an average of £1,824 a year being saved. The average rental price per month there was £689 – far cheaper than London, although the average mortgage of £537 a month was also significantly cheaper.  The average rental price paid across the UK was calculated as £912 per month. This compared with just £723 a month on average for a mortgage payment. The total saving overall, then, worked out at £2,268 per month.  Of 12 regions, the bottom place was taken by the East of England. However, even here there was a saving of £516 on average to be made each year by owning rather than renting a property. The average monthly rent of £905 wasn’t too far apart from the average monthly mortgage payment of £862, but there were still clearly savings to be made.  Reports state some landlords are looking to increase rents this year, with changes in policies designed to put people off becoming landlords said to be to blame. So, it may be the gap between renting and buying gets even bigger.  “One of the biggest barriers to home ownership is the difficulty in finding enough cash for a deposit,” said Darren Pescod, CEO of The Mortgage Broker Limited. “While there are always news stories about people who have managed to save for a deposit in a short time, many find it challenging to do so – particularly with high rental costs hanging over them.  “However, the data from Santander does show it is much cheaper in many areas to buy rather than rent. This may come as inspiring news to those looking to save a deposit and get a mortgage, as there are still lots of great deals out there. Some areas will clearly see a bigger difference than others, but those living in London, Northern Ireland, and the North West will notice the biggest savings when switching from home rental to home ownership.”  Making the switch is never easy, but with various schemes set up to help first-time buyers, there may never be a better time to switch from renting to buying than now.