Renting now cheaper than owning first home in nearly all regions

It’s now cheaper to rent than buy across nearly every region in the UK with monthly home-owning costs for first-time buyers having risen 113% in the last decade compared to just 82% for renting.

The South West, London and Scotland are now the only regions where owning a first home is cheaper than renting, latest data from the Halifax Owning vs Renting Review reveals.

BETTER OFF

The East of England has widest gap, with renters £2,325 better off annually and the monthly cost to first-time buyers of owning a home is now £1,231, -£27 lower than renting an equivalent property – the smallest gap recorded since 2019.

The analysis, based on the housing costs associated with a mortgage on a three-bed home compared to the average monthly rent of the same property type, found that monthly rental costs in 2023 grew by 24% to £1,258, while home-owning costs grew by 27% to £1,231.

Kim Kinnaird, Halifax Mortgages Director, says: “Our latest analysis shows that, in nearly all regions across the UK, first-time buyers are better off renting than owning a similar home.

“We know home ownership can offer long term financial and living stability and that’s why we believe it’s an important step to take.

“Our customers want to create a secure future, so it’s a big priority for us to help people get there. However, elevated borrowing costs, alongside a lack of available homes to buy, is pushing ownership further out of reach for would-be first-time buyers in many parts of the country.”

SUSTAINABLE MIX

Nathan Emerson,Chief Executive of  Propertymark, says: “Rental costs have surged in recent years and various governments across the UK have a duty to support the creation of a sustainable mix of properties within the rental sector.

“Mortgage tax relief was scrapped in 2015 and this created a situation of landlords unwillingly being forced to pass increased overheads onwards to consumers.

“Attention needs to be paid to housebuilding targets and further support for first-time buyers.

“With inflation now nudging back down, Propertymark is extremely keen to see a reduction in interest rates as soon as possible to help uplift consumer confidence and affordability within the sales arena.”

NO CLIFF-EDGE

Tom Bill, Head of UK Residential research at Knight Frank, adds: “There has been no cliff-edge moment for house prices despite borrowing costs rising sharply over the last two years.

“The prevalence of fixed-rate mortgages means any financial pain is entering the system in a staggered way.

“The story of the last two years has been a slowdown in transactions not prices, which has made renting a cheaper option in some areas, even though the lettings market has suffered from a lack of supply.

“Given that housing will be one of the issues taking centre-stage at the election, it would be surprising if the government failed to offer any help to first-time buyers.”