The Financial Gap Between Buying And Renting Is Reducing

Property owners in Scotland save an average of £747 per year compared to those who rent, according to new research by Halifax.

The average monthly costs associated with buying a three bedroom house in the UK for a first-time buyer was £666 in June 2015, 8% lower than the typical monthly rent paid on the same property type.
 
This is in contrast to June 2009, during the financial crisis, when the average cost of buying was 16%  more than the average rent paid. Even though the average price paid by first-time buyers for a three bedroom house is 25% higher than six years ago, the monthly costs of owning has come down as the average mortgage rate has fallen to 2.91% from 4.92%. Average rents have grown by 23% in the same period.
 
In the past year, with the price of a typical first-time buyer home rising by 8%, the difference between the cost of owning vs. the cost of renting has narrowed from £85 in 2014 to £56 in 2015 – a fall of 34%. This is partly as a result of average monthly mortgage costs rising by £40 while average monthly rents have only increased by £8.
 
First-time buyer numbers are also on the up. According to figures from the Council of Mortgage Lenders, there were 136,100 first time buyers in the first six months of 2015. Compared with the same period in 2014, this represents a 9% fall in purchases – the first annual decrease on this basis since the first half of 2011.
 
Craig McKinlay, Mortgage Director, Halifax said:

"Looking at monthly costs, the combination of lower mortgage rates and declining rental value over the past six years has made it cheaper to buy than to rent. While numbers of first-time buyers getting on to the housing ladder in the first six months of both 2014 and 2015 has been over 135,000 – almost double the lows seen in 2009 – the issue of building more new homes in the right places needs to be addressed if we are to see sustainable growth.”