Blogs

Where is it cheaper to buy than rent?

Alex Johnson

7ceab01962c5bd9188224295014fe8dc30285147 300x200 Where is it cheaper to buy than rent?Tenants pay 14% more on average in rent than owners pay on mortgages, according to research out today from property search website Zoopla.co.uk.

The analysis by Zoopla (a partner of The Independent) suggests that renting a typical two-bedroom property is £987 more expensive per year than paying an interest-only mortgage on an equivalent home.

This is how they worked it out. The current average asking rent for two bedroom flats nationally is £669 per month, compared to an average asking price of £140,692. Servicing an interest-only mortgage at 5% would cost £7,035 pa, 14% less than the £8,028 paid by the average tenant for such a property. Using a 90% loan to value interest-only mortgage at a typical ‘Best Buy’ rate of 4.39%, the premium paid by tenants is even higher. The average mortgage would stand at £126,623 with an interest cost of £463 per month, saving the average owner £2,463 a year (not including the cost of the 10% deposit).

The result is that buying is now cheaper than renting across 86% of the UK’s cities, up from 84% one year ago.

As in many areas of the property market, a north-south divide is apparent in the cost of renting versus buying. Northern cities dominate the list of areas where it is the most cost-effective to buy – nine out of the top ten places where it is cheaper to buy than rent are in the north.

Hull tops the list of the most expensive places to rent compared to buying. Tenants there pay £2,855 a year more than owners. York and Peterborough are also in the top three list of places where buying easily beats renting.

Southern towns feature more prominently in the list of areas where it is cheaper to rent than buy. Swansea tops the list – on average, owners in the Welsh seaside town pay £1,169 per year more than tenants. Bournemouth, Stockport, Dundee, Edinburgh, Plymouth and Huddersfield are the only other places in the UK where renting is cheaper than buying at the moment.

Despite high property values in London – where buyers have to pay £570,760 for an average two-bedroom property – owning is still 2% more cost-effective than renting, with owners £682 a year better off than renters.

TOP 5 LOCATIONS WHERE BUYING BEATS RENTING

Rank Location Avg. Monthly Rent* Avg. Asking Price* Rental Premium**
1 Hull £624 £92,667 61.6%
2 York £997 £149,354 60.2%
3 Peterborough £650 £104,141 49.8%
4 Milton Keynes £815 £140,984 38.7%
5 Derby £568 £100,609 35.5%

TOP 5 LOCATIONS WHERE RENTING RULES

Rank Location Avg. Monthly Rent* Avg. Asking Price* Rental Discount**
1 Swansea £672 £184,658 -12.7%
2 Bournemouth £789 £207,594 -8.8%
3 Stockport £559 £141,820 -5.4%
4 Dundee £533 £130,471 -2.0%
5 Edinburgh £711 £173,438 -1.6%

Tagged in: ,
  • http://www.facebook.com/profile.php?id=574311716 facebook-574311716

    Really don’t need Zoopla to tell us this. It’s been so in most places for years – at least since mortgages were available for around 5%. Also if you buy in the right place you should see some capital gains. Meanwhile rents will be rising with inflation while the real value of the mortgage debt will be falling.

  • http://www.facebook.com/profile.php?id=574311716 facebook-574311716

    Neither does rent buy you anything – so the comparison is fair.

  • mickrussom

    Too bad your moron party politics dont do anything about the banking cabal one way or the other. You debt slaves are just sheeple to the banks, and they buy elections. You are so cute with your dumb black and white politics.

  • mickrussom

    Thatcher is now a distant memory, what is here today is muslims, russians, crypto communists and a totalitarian banking cabal.. Nobody british is in charge anymore.


Most viewed

Read

N/A

Property search
Browse by area

Latest from Independent journalists on Twitter