Renting in Britain costs £1,000 more a year than buying

Alex Johnson

40ed47a8cf84a71292f49d480f499af87f067025 300x175 Renting in Britain costs £1,000 more a year than buyingAn interest-only mortgage on an average property in Britain costs £1,080 less per year than the cost of renting, according to the latest data released from property website, one of The Independent’s partners.

Looking at properties on the market in the top 50 towns in Britain, the research suggests that owning is more cost effective than renting in 90% of locations around the country. The average asking rent for two bedroom flats nationally is £668 per month, while the average asking price of equivalent properties is £138,769.

Here’s how they worked it out…

An interest-only mortgage at 5% p.a. would cost £578 pm, a saving of £90pm or £21pw compared to renting and leaving renters £1,080 p.a. worse off compared to owners. Using a 90% Loan to Value interest-only mortgage at a typical best buy rate of 4.39% , the cost of renting is even higher. The average mortgage on a two bedroom flat would stand at £124,892 with an interest cost of £457 pm, saving the average owner £2,532 p.a., not including the cost of the 10% deposit.

York tops the list of places where renting is currently most expensive compared to buying, with a 76.1% rental premium. Peterborough, Reading, Milton Keynes and Northampton all also have significant rental premiums and are much more cost effective places to own rather than rent. At the other end of the scale, it is currently more cost effective based on asking prices and rents for available properties to rent in Swansea, Cambridge, Bournemouth, Dundee and Huddersfield.

Lawrence Hall of, said: “The cost of renting continues to balloon as a result of first-time buyers continuing to struggle to get affordable financing. Even for an interest-only mortgage, it’s generally much more cost-effective to buy. Property prices are low by historic standards, and sellers struggling to sell are reducing asking prices, meaning there are still some bargains to be had for those lucky enough to be able to get a mortgage.”

Properties for sale in York

Properties for sale in Milton Keynes

Properties for sale in Swansea

Properties for sale in Dundee

Tagged in: , ,
  • jonseer

    So the difference is around 20 GBP’s per week, but the real difference is moving when you want without the cost of estate agent, & delays due to finding a buyer who might pull out at the last moment, also the possibility, likely at the moment of capital loss.
    Renting is the best by far at present, no matter what “Right Move” or ” Zoopla” might say, to further their own interests no doubt. Wink wink, nod, nod.

  • Ess Bo

    Of course that assumes interest only, kept at very low rates and no loss in value on the house. The year on year trend in halifax shows that house prices are still falling.

    Plus if you rent you have the felxability vs a very long term loan! Renting is miles and miles better!

  • Jenny Walley

    What about maintenance costs!!

  • richardbarran

    If you’ve got an “interest only” mortgage, then you haven’t “bought” a house… you’re just renting from the bank rather than from a private landlord.

  • MDCC_Massive

    Lies and more lies. Where is a 25 year interest only mortgage at 5% available from. Me thinks the writer of this article is trying to offload his rapidly devaluing by to let portfolio.

Property search
Browse by area

Latest from Independent journalists on Twitter