We’ve seen several articles recently about whether renting or buying is cheaper so we wanted to actually explore whether the articles are true or not. According to latest research, renters are initially £2,000 a year better off but could miss out on lower lifetimes housing costs.
Across the 376 boroughs within the UK renting is cheaper than buying across all but of two despite strong rental growth and historically low bank base rates. This is especially true in the new era whether interest only mortgages are rare and come at a high price, particularly for the first time buyers.
The new findings have shown that on capital repayment basis and taking into account the initial cost of buying, the common perception that it is cheaper to buy than rent help by the majority of existing and aspiring home owners is actually misplaced. It apparently now costs on average £2,08 more or 21% in the first year of ownership to buy than to rent the average two bedroom property for those with a 75% loan to value, rising to almost £7,400 in inner London after capital repayments have been taken into account.
The majority of households understand the long term benefits of home ownership, such as wealth generation and lower lifetime housing costs, these benefits have become less attainable, as the costs associated with the early years of home ownership trap more people in the private rented sector. You can download the full research from Savills.