Homebuyers £500 better off each year than renters

Homeowners are now almost £500 better off annually than renters, new research suggests.

Analysis by Halifax shows the monthly cost of owning a home for first-time buyers is now £971 - £42 or 4% lower than the cost of renting the equivalent property.

Its latest Halifax Owning vs Renting Review is based on housing costs for first-time buyers with a mortgage on a three-bed home compared with the average monthly rent of the same property type.

The research found that the £971 owners are now paying compares with £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.

The largest gap between owners and renters in the UK, in percentage terms, can be found in Scotland.

Those renting in the nation pay an average £918 per month compared with £727 for homeowners – 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.

Kim Kinnaird, mortgages director at 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.”

Commenting on the research, Tom Bill, head of UK residential research at Knight Frank, said: “To the frustration of tenants, rents are likely to stay higher for longer this year due to resilience of the sales market, which means more asking prices are being met and fewer owners are becoming landlords.

“On top of that, landlords are still exiting the sector due to tax changes in recent years and the prospect of more to come. Policies that attract landlords and are built on the principle that higher supply means lower rents would alleviate some of the pain for tenants."