Buying is cheaper than renting in 90% of 50 towns in Britain. On average, renting in Britain costs £1,080 per year more than buying.
The research by Zoopla shows that in York, Peterborough and Reading, the most expensive places to rent, it is cheaper to buy, while it is cheaper to rent than to buy in Swansea, Cambridge and Bournemouth.
According to Zoopla, the average asking rent for two-bedroom flats nationally is currently £668 per month, while the average asking price to buy equivalent properties stands at £138,769, costing £578 per month in mortgage costs.
However, Zoopla’s sums are done on the basis of servicing an interest-only mortgage – and interest-only mortgages are rapidly becoming a thing of the past. A number of lenders have closed their books to new interest-only borrowers, citing a fall in demand.
Zoopla also does some sums using a 90% LTV interest-only rate, whereas many purchasers of a two-bedroom flat at under £40,000 would be first-time buyers who typically will need a 20% or 25% deposit.
However, were a borrower able to get a 90% interest-only mortgage at 4.39%, the average mortgage on a two-bed flat would stand at £124,892, costing £457 per month, saving the average owner £2,532 per year.