Owning 'cheaper than renting'

30/01/12

By Vicky Shaw

Owning a home has become more than £100 a month cheaper than renting, with a widening gap emerging, research suggested today.

Homeowners who have taken out recent deals typically pay £600 a month for a three-bedroom house, amounting to £116 or 16 per cent less than the average of £716 paid a month for renting one, the Halifax found.

Wales is the only area of the UK where renting is cheaper than buying, with owning a home costing £5 a month more than renting.

Buying is most affordable relative to renting in London, with the average borrower paying £1,089, more than 10 per cent less per month than the typical private tenant.

The overall figures show a significant about-turn since 2008, when the average cost of owning a home was £928, 29 per cent higher than typical monthly rental costs of £721.

Halifax said the reduction in home buying costs was driven by falling mortgage rates as well as house prices.

The mortgage rate for a new borrower has fallen from 5.75 per cent on average in 2008 to 3.63 per cent last year, as lenders have been offering some of their cheapest ever deals due to the Bank of England's historic low 0.5 per cent base rate, while average house prices have dropped by 11 per cent over the same period.