Renting more expensive than buying in four out of five towns

Renting a home in Britain is currently 9.7% more expensive than owning, on average.

It is cheaper to buy instead of rent in four out of five of the 50 largest towns and cities across the country.

New research from Zoopla looks at the current asking prices and rents of two-bedroom flats around the country and assumes interest-only mortgage payments of 5% pa to provide a comparison with the cost of renting.

The range of results by location provides an insight into where it is best to rent instead of buy, and vice-versa.
 
Milton Keynes tops the list of places where renting is the far less attractive option, with average rents exceeding the cost of servicing a mortgage by 43%, leaving renters there on average £2,964 per year worse off compared to owners.

At the other end of the scale, it is currently much more cost-effective to rent in Poole than buy, with renting 27% cheaper and the average tenant better off by £3,240 per year by renting instead of buying.

Even in London, which has by far the highest property prices in the country and where the average two-bedroom flat costs £431,366, buying is still 16% more cost-effective than renting.

With average rents at £2,137 per month in the capital versus an average cost of a 5% interest-only mortgage at £1,797 per month, renters pay an extra £4,080 annually compared with owners.

Nicholas Leeming, business development director of Zoopla, said: “The relative cost of renting as opposed to buying has increased over the past 12 months as rents have risen and house prices and interest rates have remained flat.

“Almost 750,000 would-be first-time buyers have reluctantly ended up as renters over the past three years as a result of being unable to get a mortgage. With current house prices and interest rates where they are and with rents on the rise, for those who can get a mortgage, there may never have been a better time to buy.”