People who own their homes are almost £500 per year better off than renters, according to the latest Halifax Owning vs Renting Review.
The analysis compares housing costs for first-time buyers (FTB) with a mortgage on a three-bed home to the average monthly rent for a similar property.
It found homeowners are typically spending £971 per month on things like mortgage payments, funding a deposit, household repairs and maintenance and insurance. This compares to the £1,013 paid by renters, who have to find an additional £42 per month.
While still equating to almost £500 savings for owners (on a rolling 12-month basis), the gap has reduced significantly from the peak in 2016, when homeowners were more than £1500 per year better off.
And the picture varies across the UK too. The biggest percentage gap is in Scotland, where homeowners pay £727 per month, compared to the rental bill of £918 – a 21% saving for those on the property ladder. Renters in London pay £2,074, where homeowners have a lower bill of £1,828.
It was cheaper to own in all regions bar the East of England, where it’s renters who are better off in comparison, with monthly savings of £90.
Halifax mortgages director Kim Kinnaird comments: “Our latest analysis shows that becoming a homeowner can bring significant savings for people. Nationally, homeowners are almost £500 better off than renters each year. These benefits are felt most keenly in London, where homeowners are saving nearly £3,000 annually compared to those renting similar properties – a significant figure. In fact, the only region where it is cheaper to rent than own is the East of England, where renters are holding onto £90 each month, compared to owners.
“Of course, making the move from renting to home ownership can be difficult for many, as raising a sufficient deposit and then finding the right property can be challenging. While a predicted fall in house prices this year will be welcome news for those looking to buy their first home, it doesn’t change the fact that getting on the property ladder remains expensive – a problem that is compounded when rents are high, impacting the ability to save.”
The Halifax analysis also looked at the size of cash deposits being raised by FTBs across the country, which found these are lowest in the North East at £32,920, or 19% of average property prices. This compares to £97,320 in the South East, £87,157 in the East of England and a staggering £188,663 raised on average by FTBs in London.
