First-time buyers may be better off waiting, as rent in certain parts of the UK can be as much as £2,000 a year cheaper due to high mortgage costs.
Compared to first-time buyers, renters in the East of England save the most: according to the Halifax Owning vs Renting Review, they save an average of £2,325 per year.
Potential homeowners are faced with higher mortgage rates and a shortage of available homes on the market, driving up prices.
Significant annual savings can also be achieved by renting compared to buying a first home in the South East (£1,859), the East Midlands (£1,741) and Yorkshire & the Humber (£1,731).
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The South West, London and Scotland are currently the only regions where owning a primary home is cheaper than renting. The biggest annual savings are in the South West, where owners earn £1,663 more.
Overall, the monthly cost for first-time home buyers is now £1,231, just £27 less than renting a comparable property. This is the smallest gap between home ownership and renting recorded since 2019.
“We know that home ownership can provide long-term financial stability and life security, and that’s why we believe this is an important step. Our customers want to build a secure future, so helping them do that is a big priority for us,” said Kim Kinnaird, mortgage director at Halifax.
“However, higher borrowing costs and a shortage of available homes are making home ownership unaffordable for prospective first-time buyers in many parts of the country. That is why we are key participants and strong supporters of government affordable home ownership schemes, such as shared ownership and the Mortgage Guarantee Scheme, and we are committed to helping first-time buyers achieve their dream of owning their own home.”
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The analysis, based on the housing costs associated with a mortgage on a three-bedroom home compared to the average monthly rent for the same property type, found that monthly rental costs rose 24% to £1,258 in 2023, while the cost of owning a home rose 27% to £1,231.
If we look back a decade, the monthly cost of owning a home for first-time buyers has increased by 113% and renting costs have increased by 82%.
Nathan Emerson, CEO of Propertymark, said: “We need to see the UK government and the devolved administrations introduce tax incentives to bring landlords back into the market and increase rental supply.”
“Attention must be focused on housing targets and continuing to support first-time buyers. With inflation now falling again, Propertymark is keen to reduce interest rates as quickly as possible to boost consumer confidence and affordability in the sales space,” he added.
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