Owning a property is cheaper than renting in nine out of 10 British towns

The cost of servicing an interest-only mortgage is lower than the cost of renting the equivalent property in 44 of the 50 largest towns and cities across Britain, according to research from property website Zoopla.co.uk, a partner of the Independent.

Average rents for two bedroom flats outside London are £659 per month while the average asking price for two bedroom flats outside London is £139,451. Owning one of these properties and servicing an interest-only mortgage at 5% per annum would cost £581 per month, making renting 13% more expensive and leaving buyers nearly £1,000 per year better off.

Places where buying beats renting by the biggest margin include York, (pictured – details here) Milton Keynes and Derby. At the other end of the spectrum and bucking the overall trend of buying being better, renting remains the cheaper option in Bournemouth, Swansea and Oldham.

In London, renting is even more expensive than buying compared to the rest of the country, with average rents running 17% higher on average than servicing a mortgage. With asking prices for two bedroom flats in the capital at £483,069 and the average rent on an equivalent property at £2,362 per month, owners in London are £4,200 per year better off than renters.

“While buying is clearly the better option than renting at the moment based on our research,” said Lawrence Hall of Zoopla.co.uk, “the difficulty in saving for a deposit and the tight lending conditions are preventing huge swathes of would-be buyers from taking advantage of the current lower cost of owning a home. And with more potential buyers being forced into the rental market, rents are rising based on the higher demand.”

Property for sale in York

Property for sale in Milton Keynes

Property for sale in Derby

Property to rent in Bournemouth

Property to rent in Swansea

Property to rent in Oldham

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• TedMuller

  Industry cherry picking…

• Bankside

  Perhaps this headline should have highlighted that it doesn’t include paying back any of the debt, or any of the additional bills that a householder has such as insurance, repairs and replacement to white goods, heating, service charges and other maintenance etc. Nor does there seem to be any reference to the money you’d receive in interest for the massive deposit that’s needed.
  So after 25 years you’d still not own the property

  I also suspect that the mortgage rates used in the calculations are not for a typical FTB who may only have a 5 or 10% deposit

  I guess that wouldn’t have fitted in with the fact that the article follows on with homes for sale link on the report writers website.

  Shouldn’t this be in the advertisements section and not dressed up as factual news reporting?
  Perhaps Alex Johnson will be along to explain shortly

• HJ777

  This article is forgetting other costs associated with owning a home, such as maintenance costs.

  What’s more, if you have an interest-only mortgage (with which the comparison is made) you won’t be an owner.

• http://twitter.com/subjectsmith subject smith

  Well, if it was cheaper to rent than to pay an interest only mortgage, how would landlords make any money? This does ignore the additional costs landlords incur, building maintenance, insurance, void periods, furniture costs, licensing costs, letting costs. When you consider people operate as landlords as a business – presumably to make a profit, and they have these additional costs, how is it news that the cost of an interest only mortgage is less than the fee charged by landlords?

• QuantamPro

  Only a fool would try to get an interest only mortgage now. Besides the fact that you will never own a single brick if you overpay on a repayment mortgage then you soon get into a position where repaying is actually cheaper than renting.

• http://profiles.google.com/mail987 Chris D

  Looking at the past ten posts by the author Alex Johnson, every single one is simply an advert written for blatant SEO purposes for Zoopla.

  Please try to be less blatant about trying to trick Google, it makes us professional SEO’s look careless.

• tyke87

  This assumes that house prices will stay at their inflated levels which is highly unlikely. They are being artificially held up. Even as a cash buyer I am renting at the moment.

• http://twitter.com/brentmeister27 Enoch

  Only because interest rates are at record lows. First time buyers must realise that owning a property means on average 25 years of continuous, full time employment. Lose your job, then all bets are off. What Britain needs is not more home owners but a regulated, more accessible rented sector. A rented sector that reflects average wages and is linked to inflation (whether up or down). People need a roof over their head, not a millstone around their neck.

• ollieclark

  It’s the same for unfurnished houses (in Leeds certainly) so if you rent you still have bills, replacement white goods, etc. True the landlord pays for repairs and buildings insurance but that’s not that much really.

  If you rent for 25 years you don’t own the house. If you pay an interest only mortgage for 25 years, you owe the cost of the house 25 years ago and own the considerably more expensive house.

  HSBC will give you a 4.6% mortgage with a 10% deposit (random advert picked out of the i from yesterday).

  The article is pretty spot on really. For most people in most of Britain, it’s cheaper to buy than rent and you own a house at the end of it (even if you do still owe the cost of the house 25 years ago).