Renting or owning a property – which is cheaper for first-time buyers?

Latest Halifax report reveals narrowing gap between owning and renting

Renting or owning a property – which is cheaper for first-time buyers?

First-time homebuyers in the UK are finding the monthly cost of owning a property is now marginally lower than renting, with the average monthly home-owning cost standing at £1,231, which is £27 less than the cost of renting a similar property.

This represents the narrowest gap between owning and renting since 2019, as indicated in the most recent Halifax Owning vs Renting Review.

The analysis, comparing the expenses associated with a mortgage on a three-bedroom house against the average rent for a similar property, has revealed that in 2023, rental costs surged by 24% to £1,258, whereas the costs of owning a home increased by 27% to £1,231.

According to Halifax, owning a home not only allows for an annual saving of £319 over renting but also offers the potential for long-term financial security and remains a sought-after goal for many.

Despite these benefits, owning a first home was still more expensive than renting in nine out of 12 regions or nations in the UK last year.

Renters found the greatest annual financial advantage in the East of England, saving an average of £2,325 compared to first-time homeowners. Significant yearly savings were also observed for renters in the South East (£1,859), East Midlands (£1,741), and Yorkshire and the Humber (£1,731) when juxtaposed with the cost of owning a first home.

Conversely, the South West, London, and Scotland were the only areas where buying a first home proved cheaper than renting, with the most considerable annual savings noted in the South West, where homeowners were £1,663 better off.

“Our latest analysis shows that, in nearly all regions across the UK, first-time buyers are better off renting than owning a similar home,” said Kim Kinnaird (pictured), mortgages director at Halifax. “In fact, the only regions where it’s cheaper to own rather than rent are the South West, London and Scotland.

“We know home ownership can offer long term financial and living stability, and that’s why we believe it’s an important step to take. Our customers want to create a secure future, so it’s a big priority for us to help people get there.

“However, elevated borrowing costs, alongside a lack of available homes to buy, is pushing ownership further out of reach for would-be first-time buyers in many parts of the country. This is why we’re major participants and big supporters of the government’s affordable home ownership schemes, such as shared ownership and the mortgage guarantee scheme, and we’re committed to helping first-time buyers fulfil their dreams of having a place to call their own.”

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