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Renting cheaper than buying for first time since 2014

For the first time in seven years it’s now cheaper to rent a home than buy one.

So says the Hamptons lettings agency which states that in May the average tenant in Britain spent £71 per month less in rent than if they were servicing the repayments on a 90 per cent loan-to-value mortgage on the same home. 

This means they would have spent a monthly average of £1,054 on rent compared to £1,125 on mortgage repayments.


This is a switch-around to the position just before the pandemic. In March 2020 a buyer with a 10 per cent deposit would have been £102 per month better off buying.

Aneisha Beveridge, Hamptons' head of research, says: "A year ago, lenders were either increasing their rates or withdrawing higher loan-to-value mortgages altogether. For first-time buyers in particular this pushed up the cost of paying a mortgage, if they could get one at all, to well above the cost of renting."

Hamptons says that right now there are only four regions in Britain where it is cheaper to buy than rent – the North East, North West, Yorkshire & Humber and Scotland.

Despite rents across Britain rising by an average 7.1 per cent over the last 12 months, strong house price growth coupled with increases in higher loan-to-value mortgage rates have added to the cost of buying and owning a home.

London has seen the largest shift since the start of the pandemic.  


A buyer putting down a 10 per cent deposit on a property in the capital will have gone from being £123 per month better off buying in March 2020, to spending £251 per month less on rent in May 2021. 

Falling rents in the capital have made renting cheaper relative to buying by a bigger margin than anywhere else. And Hamptons says that with rents still falling, the differential looks set to continue growing.

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    There are lies, damn lies and statistics

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    This is complete nonsense. Interest rates are so low and there is a shortage of rental properties meaning rents are rising.

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    All these comparisons forget the huge effect stamp duty, legal and mortgage arrangement fees etc. add to the costs of owner occupiers. People who move every few years or shorter are considerably cheaper renting.

    The biggest costs of renting are missing out on capital growth and being potentially exposed to rent increases, greater than potential interest rate increases.

    Again these factors are ignored in comparisons which only focus on monthly outgoings and ignore factors which may have a much larger effect overall.


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