The cost of owning a home in the UK is now on average £124 per month lower than renting (£1,488 a year), according to research by Halifax.
The average monthly costs associated with owning a three bedroom house stood at £645 in December 2013; which is 16% lower than the typical monthly rent of £769 paid on the same property type1.
This is the largest cash difference since 2009, when the figure stood at just £6 and average monthly costs for owning and renting were £646 and £652 respectively.
The gap between the costs of owning and renting is being driven by average monthly rents increasing by over £100 since 2009, while average monthly ownership costs have remained relatively unchanged over the same period.
This picture is in stark contrast to the situation for renters five years ago when, in 2008, the monthly ownership cost was on average £226 (31%) higher than rental costs.
The half yearly Halifax Buying vs. Renting Review tracks the cost of buying and renting a three bedroom property across the UK. Average buying costs include mortgage payments, income lost by funding a deposit rather than saving, spending on household maintenance and repair and insurance costs. They do not include one-off costs, such as stamp duty, valuation and legal fees The review is based on data from the Halifax’s own extensive housing statistics database, BM Solutions, the Bank of England and the Office for National Statistics (ONS). UK figures are a weighted average of regional data using housing tenure figures.
Craig McKinlay, mortgage director of Halifax said: “There has been a substantial improvement in the affordability of owning compared to renting in recent years, which has been driven by the fact that monthly home ownership costs have fallen by a third (32%) since 2008.
“Buying will continue to be a more financially attractive option as the cost of owning a home remains stable. With greater availability of mortgages that require smaller deposits, the property ladder has also become even more accessible for those who can afford the monthly costs of owning but had previously not been able to save the necessary deposit.”
Owning a home is most affordable compared to renting in London with the typical homebuyer paying £188 a month less than the average renter (£1,196 against £1,384). On the other hand, in West
Midlands and East Anglia the difference is marginal, with average monthly buying costs just £6 lower than average monthly rental costs (£553 against £559 and £633 against £640 respectively) (See Table 2). However, the level of deposit required by buyers varies significantly across regions, particularly for first time buyers in London, which is also likely to influence whether then can afford to buy.
The lower costs of owning compared with renting; an improved economic outlook and a greater availability of mortgages that require a smaller deposit may have contributed to the 15% increase in the number of house sales in 2013 compared to 2012. Sales last year were the highest since 2007 (1,619,000) but were still 34% lower at 1,069,0002.
