The cost of home ownership is cheaper than renting in 42 of 50 towns and cities across Britain, according to new figures from Zoopla.co.uk. This figure is up on 12 months ago when it was cheaper to service a mortgage rather than pay rent in 80% of towns across the country.
The problems facing first-time buyers has led to an increase in demand for rental properties and pushed up average rents. It now costs around 14% more per month to rent a home compared to servicing a mortgage on an equivalent property.
The average rent across Britain is now £1,785 per calendar month, up 2.7% since February. Milton Keynes, Dundee and Stoke-on-Trent top the list of places where owning beats renting while in Aberdeen, Bournemouth and Swansea renting is a better option in terms of cost.
To compare the cost of buying versus renting, Zoopla analysed the current asking prices and rents of over 84,000 two-bedroom flats currently on the market, comparing the rental cost to the cost of ownership based on servicing an interest-only mortgage at 5% p.a.
Renting is 21% more costly on average in London than servicing a mortgage - the average asking price for a two-bedroom flat is £474,979 and the average rent on an equivalent property is £2,500 a month. This means that wiith an interest-only mortgage at 5% p.a., owners are £6,250 per year better off than renters in the capital.
“The climbing cost of renting is exacerbating the problems the property market currently faces," said Nicholas Leeming of Zoopla.co.uk. "Higher rental costs leave less disposable income for renters to save for deposits. The problem will only ease if rental prices fall or mortgage availability improves dramatically, leaving the ball is firmly in the court of Britain’s lenders.”WHERE BUYING BEATS RENTING
1. Milton Keynes
WHERE RENTING RULES