Paying a mortgage is cheaper than renting a home in most of UK cities

 

Renting a home is cheaper than buying in just three of Britain’s 50 biggest towns and cities, a study from Zoopla.co.uk found.

Swansea, Plymouth and Bournemouth are the only three locations in the survey where renting works out cheaper than buying a property.

In London, renting is 31pc more expensive than the cost of ownership, leaving renters paying £6,888 annually on average compared with owners.

Rents have soared due to high demand in the sector, as would-be buyers needing large deposits or finding the terms of some deals too restrictive have struggled to get on the property ladder.

It means that struggling would-be home owners are paying the price in more ways than one in not being able to get a mortgage.

The property website said that for those who manage to get a mortgage deal, buying beats renting in 47 out of the 50 largest towns.

The figures show a significant increase on a similar study carried out last year, when buying was cheaper than renting in 40 of the 50 towns surveyed.

Nicholas Leeming, business development director of Zoopla.co.uk, said potential buyers had been unable to take advantage of the cheap deals on offer as they struggled to get access to a mortgage.

This week the Financial Services Authority said this week that fewer than 2pc of all mortgages approved this year were for borrowers with less than a 10pc deposit.

He said: “The shortage of financing, especially for first-time buyers, has pushed demand for rental property through the roof.

“But for those lucky enough to be in a position to get a mortgage, there may never be a better time to buy.”

Milton Keynes was named as the place where buying a home was the most cost-effective compared with renting, with renting being 36pc more expensive than owning, leaving renters typically £2,436 a year worse off.

The survey looked at the percentage variance between renting and buying a two bedroom flat with an interest-only mortgage payment at a rate of 5pc.

Figures from the Council of Mortgage Lenders showed that first-time buyers are hampered by the need to save for a deposit.

Only one in a hundred borrowers had a deposit of 10pc or under, compared to 13 in 2007 – meaning that first-time buyers are having to save for longer or rely on their parents to finance a house purchase. Rocketing rents and deposits mean that it is harder than ever to save for this deposit.

Source: The Telegraph 

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