Monday, 23rd June 2014

Renting costs less than owning thanks to house prices

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Increasing house prices now means it is significantly cheaper to rent than buy , with renters paying just 93p for every £1 spent on mortgage repayments.

The figures by property firm Countrywide show that as house prices continue to soar renting becomes ever cheaper. Renters were only paying four per cent less then homeowners a year ago, with that figure now standing at seven percent.

The price of the average home in the UK has risen by 11 per cent over the past year, to a new high of £260,000. By contrast, the cost of renting rose by 3.7 per cent in the year to April.

The gap between renting and buying has widened in all parts of the UK bar South Wales and North-East England, where house prices have fallen in recent months.

'Home ownership has long been part of the British psyche,' said Nick Dunning of Countrywide.

'However, for many households, particularly in the short to medium term, home ownership doesn't always make sense financially or otherwise.

'As house prices rise, renting increasingly allows people to live in areas they would otherwise be unable to afford to buy.

In more expensive cities, such as London, the cost of renting in more central areas can be just half the cost of buying.'

He added: 'While in the long term capital repayments will mean that homeowners build up equity in their property, in the shorter term, purchase costs such as stamp duty and the ongoing costs of maintenance can mean the cost of homeownership is considerably higher than renting.

'In the first year of ownership, taking into account all associated costs, a buyer with a 10 per cent deposit will pay 35 per cent more than someone renting the equivalent property.'