Gap between renting and buying costs widens as tenants pay more
Renting is over £130 a month more expensive on average than buying.
According to Halifax, which included in its buying costs mortgage payments, income lost by funding a deposit rather than spending, insurance, and household maintenance and repair costs, the average monthly cost of buying a three-bed home was £600 in June.
This was £132 or 18% less than the average monthly rent of £732 for the same property type.
Over the last year, buying costs have dropped by 3%, while the cost of renting has gone up by 5%.
Last year, the monthly cost associated with buying was £78 or 11% less than renting.
By contrast, in 2008, average home buying costs were £1,048 per month, or 45% – £324 – more than the average rent.
Monthly home buying costs currently account for 29% of average disposable income, down from 54% in 2008
However, the Halifax research points out that despite the improvement in affordability, the number of buyers entering the housing market remains weak. There were 535,000 buyers with a mortgage in the 12 months to June, 33% fewer than in the same period to June 2008.
While the research highlights the high deposits required, the same high deposits would be helping to keep mortgage repayments down, with the purchase repaying the loan on, for example, a 75% LTV mortgage rather than a 90% or 95% loan.