Buying is £124 a month cheaper than renting

17 March 2014

It is £124 a month cheaper on average to own a typical three-bedroom home in the UK than it is to rent, according to Halifax.

The average monthly cost of home ownership was £645 in December 2013 (based on a mortgage of 73% of the average three-bedroom property value) - 16% lower than the typical monthly rent of £769 charged for the same property type.

Halifax said the relationship between the cost of owning and renting is being driven by average monthly rents increasing by over £100 since 2009, while ownership costs have remained almost the same over the period.

The gap between the two costs in December 2013 was the biggest it had been since 2009, when there was a difference of just £6 (in 2009 it cost £646 a month on average to own, and £652 to rent).

A year earlier, things were completely different. In 2008, the monthly ownership cost was 31% higher than the cost of renting.

However, the cost of buying versus renting is very much dependent on location. For example, in London it's £188 a month cheaper to buy than to rent, but in the West Midlands and East Anglia, it's only £6 a month cheaper to buy.

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Craig McKinlay, mortgage director at Halifax, said: "There has been a substantial improvement in the affordability of owning compared to renting in recent years. Buying will continue to be a more financially attractive option as the cost of owning a home remains stable.

"With greater availability of mortgages that require smaller deposits, the property ladder has also become even more accessible for those who can afford the monthly costs of owning but had previously not been able to save the necessary deposit."  

While the buying costs included in the Halifax research include mortgage payments, the deposit, maintenance and insurance, they exclude stamp duty, valuation and legal fees - which make up a significant chunk of a homebuyer's costs.

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