Owning is cheaper than renting in 90% of towns
York tops list of towns where renting is more expensive than owning
December 13, 2012 | post last updated on September 5th, 2016
Maintaining an interest-only mortgage is cheaper than paying rent in the vast majority of UK towns. A study by property website Zoopla found that in only 10% of the 50 towns they surveyed was renting the cheaper option. The gap between the average rent and the interest on the average property is more than £1,000 per year. York is currently the town where this gap is most marked.
If a 10% deposit is raised and combined with best available interest-only rate of 4.39% the savings compared to renting are even higher. The average rent is £668 per month whereas the average mortgage on a two-bedroom flat would stand at £124,892 with an interest cost of £457 per month, saving the average owner £2,532 per year.
This again reinforces the benefits of owning you own home which makes it even more important to ensure that the current generation of would-be first time buyers are not locked out of getting on the housing ladder. Homes are currently unaffordable for whole swathes of working people and the only way to keep prices from spiralling out of control is building enough to meet demand. Sadly building starts are hovering around 100,000 per year whereas there are 230,000 new households are formed every year.
Lawrence Hall of zoopla.co.uk, said: ‘The cost of renting continues to balloon as a result of first-time buyers continuing to struggle to get affordable financing.
‘Even for an interest-only mortgage, it’s generally much more cost-effective to buy. Property prices are low by historic standards, and sellers struggling to sell are reducing asking prices, meaning there are still some bargains to be had for those lucky enough to be able to get a mortgage.’