Mortgage blog: Why you’ll be better off each year by buying a home than renting

Posted 4 October 2013 by Keith Osborne

Back in the days before the global financial crisis many people found themselves renting property as it was simply much cheaper than the costs of homeownership. Now, five years on it seems that the roles have been reversed with homeowners now finding it £875 a year cheaper to own a property than to rent.

New research from Halifax has compared the relative costs of buying and renting over the past five years. It shows that, generally speaking, it has gradually become more cost effective to buy a home rather than rent over this period.

Buying a home now around 10% cheaper than renting

Back in 2008 the average monthly cost of buying a home was £1,072 and a massive 49% more expensive than the average monthly rental cost of £720. Fast forward five years, however, and the Halifax research tells a completely different story.

"According to this latest research homebuyers are now, on average, £875 a year better off than people in rented accommodation," says Keith Osborne, editor of "Just five years ago it was around £4,200 more expensive each year to own a property rather than rent and so there has been a massive change in the cost of housing in a short period."

The Halifax data shows that the average monthly costs associated with a three-bedroom house purchase were £672 in June 2013, roughly 10% lower than typical monthly rent of £745 for the same property type.

"Over the last five years the data shows that there has been a 37% decline in home buying costs - including mortgage fees, house prices and mortgage rates - and so it's now much cheaper to purchase a home relative to renting one," adds Osborne. "One of the main reasons is that mortgage rates have fallen sharply over the last five years. In June 2008 the average mortgage rate for a new borrower stood at 5.88% compared with just 3.57% in June 2013. If you then consider that a high demand for rental property has pushed up the costs of renting then it has gradually become cheaper to buy than to rent."

Money Marketing reports that in all but two regions of the UK - Yorkshire & the Humber and Wales - it is now a more affordable option to purchase a home than to rent.

Osborne says: "The Halifax figures shows that it is now around 10% cheaper to buy a property than it is to rent. For thousands of first-time buyers owning a home is not only their ambition but also a wise financial choice."

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