Buying vs Renting in the UK: Where is it Cheaper?

Is Buying Cheaper Than Renting?

Zoopla's report shows that monthly mortgage repayments for first-time buyers average at £1,038 per month, while the typical UK rental payment stands at £1,248 per month. This means that, on average, mortgage costs are around 20% lower than renting. However, these figures assume a 20% deposit of £50,740 for a home priced at £253,700.

For those looking to buy in London, where house prices are significantly higher, the analysis is based on a 30% deposit.

Regions Where Buying is More Affordable

Zoopla analysed the costs of renting versus buying across 118 postal areas in Britain. In many cities, the difference between buying and renting is substantial.

• Glasgow: Buying is 30% cheaper than renting.
• Northern England: Cities like Newcastle and Liverpool also see mortgage payments significantly below rental costs.
• Cardiff: Buying is cheaper than renting by 30%.

However, there are some areas where renting remains more affordable:

• Harrogate: Buying costs 15% more than renting.
• Watford (WD postal area): Buying is 7% more expensive than renting.

The Challenge: Saving for a Deposit

Despite the potential monthly savings, securing a sufficient deposit is a significant barrier for first-time buyers. The amount required varies significantly by region:

• North East: A 20% deposit is around £27,700.
• London: The same 20% deposit would need to be £83,400.

Zoopla's research found that 63% of first-time buyers rely on family support to help raise their deposit.

Mortgage Affordability: The Stress Test Barrier

Another obstacle for first-time buyers is mortgage stress testing. Since 2015, new mortgage regulations require lenders to assess whether borrowers could afford payments if interest rates rose significantly - often testing against rates as high as 8%.

These rules, designed to prevent a housing bubble, mean that even those who can afford their current rent struggle to prove affordability for a mortgage.

Final Thoughts: What Does This Mean for Buyers?

For many, the decision to buy or rent is dictated not by monthly costs but by the ability to raise a deposit. While buying is cheaper than renting in most of the UK, many first-time buyers remain locked out of the market due to high deposit requirements and strict lending criteria.

At Farrell Heyworth, we help first-time buyers navigate these challenges by offering:

• Expert advice to help secure the best deal.
• Local market insights tailored to the North West.
• Property search support to match you with affordable homes.

If you're considering buying your first home or investing in property in any of our service areas, contact us today for expert guidance.