Based on the most recent Halifax Owning vs Renting Review, the monthly expenses for first-time homebuyers are now £971, which is £42 or four percent lower compared to the equivalent property’s rental cost.
The analysis focuses on the housing expenses of first-time buyers with a mortgage for a three-bedroom home, contrasting it with the average monthly rent for a similar property. The findings indicate that owners currently pay £971 per month, while renters pay £1,013 monthly.
Although homeowners still save nearly £500 annually, the gap has decreased since its peak in 2016 when owners were saving £1,567 per year.
In terms of percentage difference, Scotland exhibits the most significant contrast between owners and renters. Renters in Scotland typically pay an average of £918 per month, whereas homeowners pay £727, resulting in a 21 percent savings for those on the property ladder.
The situation in the East of England stands in contrast to other regions and nations in the UK, as it is the only area where owning a property is more expensive than renting a comparable one. On average, homeowners in this region pay an additional £90 per month compared to renters.
According to Kim Kinnaird, the mortgage director at Halifax, their recent analysis highlights the significant savings that homeowners can enjoy. Nationwide, homeowners are nearly £500 better off annually compared to renters.
These advantages are most pronounced in London, where homeowners save nearly £3,000 per year in comparison to those who rent similar properties. This is a substantial amount. Interestingly, the East of England is the only region where renting is cheaper than owning, with renters holding on to an additional £90 each month compared to homeowners.
Undoubtedly, transitioning from being a renter to becoming a homeowner can pose significant difficulties for many individuals, as the process of accumulating a substantial deposit and identifying the perfect property can be quite demanding.
While the anticipated decrease in house prices for the upcoming year may be viewed as positive news for prospective first-time homebuyers, it does not alter the fundamental reality that entering the property market is still an expensive endeavor. This challenge is further exacerbated when rental costs are high, as it directly affects one’s ability to save for homeownership.