The Price Of Renting - More Than Buying?

 

In 80% of UK towns and cities renting is now more expensive than buying, a figure that has risen significantly as asking prices have decreased and rents have increased.

On average, rents are approximately 10% higher than mortgage payments. Research by Zoopla compares current asking prices to average rents for two-bedroom flats in the 50 largest cities and towns around the country. Mortgage payments were calculated assuming an interest-only mortgage at 5% per annum.

In some locations, the extra cost of renting is clearly large and noticeable. In York, rents exceed mortgage payments by 39%. With average monthly rents at £978, York tenants are £3,270 a year worse off than if they were buying.

In a further 13 of the largest 50 cities and towns, rents exceed mortgage payments by more than 20%. Even in London, which has the highest asking prices in the country, buying is still the more cost-effective option. The average rent of £2,121 per month is still high compared to the average asking price of £444,553, though buyers are better off than tenants by 14%.

However, there are still some locations where renting is a better option than buying. In Aberdeen, where the average two-bed flat costs £833 per month to rent versus £254,618 to buy, renting is 21% cheaper than the average mortgage payment.

Zoopla’s Commercial Director, Nicholas Leeming said: “We’re seeing a real divide in the housing market. For those who are able to buy a home, costs are low, but for those who can’t, costs are much higher – and the doorway into the housing market is narrower than ever. The freezing up of credit has put home ownership beyond the reach of many renters, and it’s driving a larger and larger wedge between them and owner-occupiers.”

However, this situation would change sharply if interest rates were to increase by even just 1%. Upon this happening, renting would become more cost effective in 72% of the locations studied.

 

<--- return to news section

property agency training - property practice course

 

4 Everything Property4 Everything Property - UK Property Directory

4 Everything Property is a UK property directory bringing you the latest property news and resources. Register now for FREE newsletters and updates. Plus, if you are a property agent or property industry service provider you can also advertise in the directory for FREE.

 

© 2005-2012 Property Agency Training - Design by The Business Ladder (UK) Limited | Legal Information | Site Map