The monthly cost of owning a home for first-time buyers is now £971 – £42 (4%) lower than the cost of renting the equivalent property, according to the latest Halifax Owning vs Renting Review.
The analysis, which is based on housing costs for first-time buyers with a mortgage on a three-bed home compared to the average monthly rent of the same property type, found that the £971 owners are now paying, compares to £1,013 for renters, each month.
While still equating to an almost £500 saving per year for owners, the gap is down from its peak in 2016, when owners were saving £1,567 annually.
Table 1: UK average monthly homeowning costs and rent payments
|Year||Average monthly homeowning cost *||Average monthly rent payment||Monthly savings for owners||Monthly savings for owners||Annual savings for owners|
The UK’s greatest gap between owners and renters, in percentage terms, can be found in Scotland. Those renting in the nation pay an average £918 per month, compared to £727 for home-owners – a saving of 21% for those on the property ladder.
It is a different story in the East of England, the only region or nation in the UK where it is more expensive to own a property than rent the equivalent. Homeowners there now pay £90 more each month, on average, than those renting.
Table 2: UK average monthly home-owning and rent costs by region
|Region||Average monthly homeowning cost*||Average monthly rent payment||Monthly savings for owners||Monthly savings for owners||Annual savings for owners|
|Yorkshire & the Humber||£720||£802||10%||£82||£980|
|East of England||£1,212||£1,122||-8%||-£90||-£1,078|
Sources: Halifax, Birmingham Midshires and ONS. *Mortgage prices based on Halifax 12mth rolling data calculated to January 2023
Kim Kinnaird, Mortgages Director, Halifax said:“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.”
Go North (East)
The latest first-time buyer data from Halifax shows that, in cash terms, deposits being raised in the North East are the lowest in the UK – at £32,920, around 19% of average property prices in the area. Outside of London – where those buying a first home are raising a huge £188,663 on average – properties in the South East and East of England also require hefty deposits from new home owners, at £97,320 and £87,157 respectively.
Table 3: First-time buyer average house price, mortgage advance and deposit (2021/22, 2022/23)
|Region||Average house price||Average mortgage||Average deposit||Average deposit(% of house price)||Average house price||Average mortgage||Average deposit||Average deposit(% of house price)|
|Yorkshire & Humberside||£180,916||£142,054||£38,861||21%||£201,283||£160,090||£41,193||20%|
|East of England||£324,189||£240,307||£83,882||26%||£355,770||£268,613||£87,157||24%|
|Sources: Halifax, February 2021 – January 2022 vs February 2022 – January 2023, UK Finance|