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Property: First-time buyers now over £800 a year better off than UK renters as prices soar

FIRST TIME buyers are now a whopping £800 better off each year compared to UK renters after the gap between buying and renting widened.

New data from Halifax suggests the gap between buying and renting in the UK has stretched by eight percent over the last 12 months. Halifax’s Buying vs Renting Review looked at housing costs associated with a mortgage on a three-bedroom house compared to the average monthly rent of a similar property type. Average buying costs include mortgage payments, income lost by funding a deposit rather than saving, spending on household maintenance and repair and insurance costs.

In 2019, the difference between buying and renting on a monthly basis was just one percent.

However, in 2018, there was a monthly cost gap of ten percent between buying and renting.

Over the past ten years, average monthly buying costs have increased by 31 percent.

The cost of renting has increased by 36 percent in the same period. In the past ten years, the largest cost gap between buyers and renters was in 2015 where the price difference was £123. The smallest difference between renting and buying was in 2019 which was due to an increase in mortgage payments and an increase in rental deposits.

The average first-time buyer deposit has increased by £11,677 since the start of the coronavirus pandemic to £58,986. Meanwhile, the average mortgage payment has increased. Buyers in London are on average £4,606 a year better off than those renting in the capital. In the South East, this drops to £2,578 a year, followed by East Anglia (£2,019) and Scotland (£1,848).

The smallest gap between buying and renting is in Northern Ireland where buyers are £539 a year better off. In the East Midlands, homeowners save on average £897 a year.

Andrew Asaam, Mortgages Director, Halifax, said while the stamp duty holiday has helped “drive record levels of mortgage approvals”, the biggest savings each year are in London where house prices are the highest. During the Covid era, the cost of renting has also increased.

The property expert also said homeowners are making some of the biggest savings in the South East, East Anglia and Scotland, around £2,000 on average, compared to people who are renting. Mr Assam continued: “Raising a deposit is still the biggest challenge for those looking to get on to the property ladder, but the average first home deposit has gone up by another £11,000 since the start of the pandemic. “We know that first-time buyers will benefit from steps that make finding a deposit more of a reality and the new Help to Buy Mortgage Guarantee scheme could be a gamechanger for those saving hard to take the first step and often paying rent at the same time. “We have also committed to lending £10billion in 2021 to help people buy their first home this year.”


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