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First Time Buyer

Owning a home is a fifth cheaper than renting

Paloma Kubiak
Written By:
Paloma Kubiak

Homeowners are up to 18% better off per month than renters, but the gap is shrinking.

Halifax’s buying vs renting review revealed that buyers across all but one UK region save upwards of 10% compared to renters in the same area. The exception is Yorkshire and The Humber as homeowners save just 3% here on average, equating to £235 a year.

The gap is greatest in London, where homeowners save 18% (£3,727 annually) on average, followed by the South East (17%), South West and Scotland (both 16%).

As part of the latest data, Halifax looked at the housing costs associated with a mortgage on a three-bedroom home against the average monthly rent of the same property type.

December 2019 average housing costs stood at £728 compared to £747 for renters, meaning at a UK level, homeowners are saving 3% on average (£227 annually).

However, the gap is closing as data from December 2018 showed a 10% difference with homeowners saving an average £893 a year. In fact, the gap has been reducing from 17% year-on-year since 2015 when buyers were saving an average of £1,476 per year or £123 per month.

This has reversed from 2009, when buying was more expensive, and renters saved on average £209 per year or £17 per month.

Halifax said over the last 10 years, average monthly housing costs have also increased by 26% (£150), driven by an increase in the average mortgage payment and a rise in the amount of the average deposit. The cost of renting has increased by 33% (£186) over the past 10 years to £747.

Russell Galley, managing director, Halifax, said: “The overall gap between home buying and renting is at its smallest margin for 10 years, but this masks some significant regional variations where homeowners are making some considerable savings on monthly costs.

“While Londoners stand to save the most from home ownership compared to renting, buyers in the South East and South West of England and north of the border in Scotland are also reaping the benefits. Buyers in two thirds of UK regions are saving upwards of £1,000 a year from living in a home they own, with the smallest saving for homeowners in Yorkshire and Humberside at £227.”