Home ownership now cheaper than renting in every single part of the UK

Owning a home is now cheaper than renting in all parts of the UK – once you can actually get on the housing ladder.

The claim comes from Santander which says households could save £2,268 a year if they were able to purchase a property rather than rent.

This is based on HomeLet data showing that the average monthly rent in the UK is currently £912 per household, compared with monthly repayments of £723 for the average first-time buyer.

This then gives home owners a saving of £189 a month or £2,268 a year compared with renters.

The bank’s research is based on some bold claims, though. It uses Land Registry data to take an average first-time buyer house price of £213,462 and assumes a 76% loan-to-value mortgage at 2.48% with no fees.

There is also a regional breakdown showing the biggest annual savings are in London, at £3,468, while the smallest difference is in the east of England at £516.

There is also the issue of first-time buyers raising a deposit, which Santander puts at £51,905.

Asked how they would raise these funds, one in five said they would consider selling shares in the property, 38% would move back in with their parents while saving for a deposit and 21% said they would give up alcohol to raise the funds.

Miguel Sard, managing director of mortgages at Santander UK, said: “Many first-time buyers understandably focus on the challenge of saving for a deposit and wonder how they will afford a property. However, it is often assumed that when you purchase a property you will be under greater financial pressure, and our research shows the reverse is true.

“Of course, buying a property is a major financial investment with upfront costs to consider, but long-term the financial benefits can be significant.

“With annual savings averaging well over £2,000 this can really mount up over time and of course once the mortgage is paid off you have a valuable asset to show for it.”

UK region

Average rent

Average FTB house price

Average FTB deposit

Average monthly FTB mortgage repayment

Amount better off buying (per month)

Amount better off buying (per year)

London

£1,569

£420,500

£134,660

£1,280

£289

£3,468

Northern Ireland

£629

£131,076

£30,435

£451

£178

£2,136

North West

£689

£149,816

£29,877

£537

£152

£1,824

Scotland

£644

£142,329

£28,311

£510

£134

£1,608

Yorkshire and The Humber

£623

£143,810

£27,527

£521

£102

£1,224

West Midlands

£679

£168,287

£35,207

£596

£83

£996

South West

£799

£212,062

£50,514

£723

£76

£912

South East

£998

£276,807

£67,866

£935

£63

£756

Wales

£596

£146,557

£27,135

£535

£61

£732

North East

£509

£123,189

£22,712

£450

£59

£708

East Midlands

£622

£161,682

£32,816

£577

£45

£540

East of England

£905

£252,158

£59,553

£862

£43

£516

United Kingdom

£912

£213,462

£51,905

£723

£189

£2,268

 

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8 Comments

  1. Realitycheck97

    Err, amortised cost of purchase, plus maintenance, insurance, upgrades and refurbishments (kitchens, bathrooms etc.)

    Compare like-for-like please.  This is misleading.

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    1. CountryLass

      I came here to put that! Apart from the word ‘amortised’ as I’m not sure what that means?

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      1. mrtickle

        Amortisation is the decrease in value of something.

         

        OR

         

        Paying off something over time.

         

        “Amortised cost of purchase” in this context means that paying off a mortgage will cost you more money over time.

        I think…

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        1. CountryLass

          Thank you!

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    2. PeeBee

      Realitycheck97

      “Compare like-for-like please.  This is misleading.”

      You are asking for the impossible.  There is no ‘like-for-like’ comparison.

      With one – you live in the property, pay the mortgage – and eventually own the property.

      With the other – you have to move on when told (therefore adding to the overall cost which has not been factored in here either) – and have been paying someone else’s mortgage for them.

      I’ll take a guess you’re a Lettings Agent.

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      1. Realitycheck97

        Guess again…  Nope, not a letting agent.

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        1. PeeBee

          Okay – second guess.

          You’re not a realist.

          ;o)

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  2. Thomas Flowers

    Interesting.

    And the reason for this mess is the failure of Government to properly regulate banks who substantially increased historic lending multiples and introduced self-certified income mortgages that bust some banks leading to the loss of 95% mortgages thereby driving a generation of first-time buyers into the rental sector as they do not have 25% deposits?

    This Government’s solution to this appears to be taxing many landlords out of the sector thereby reducing the rental stock driving up rents and seeing many families thrown out of their homes as a consequence?

    Mrs May, the problem is not agents charging tenants referencing fees but the lack of 95% mortgages for first-buyers compounded by 0-hour contracts, minimum wage and gig economy self-employed ‘contractors’ who work solely for one business entity?

    The average stamp duty rates have tripled from 1% across the board to 3% in the last 10 years or so.

    Use some of that income to back indemnity assurance for first-time buyers thereby allowing 95% mortgages once more that cost less than peoples average rent?

    The Government bailed out the banks -time for them to come up with a plan to help those less well off first-time buyers?

     

     

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