Cheaper to buy than rent IF you can afford the deposit

The monthly costs for a first time buyer are some 13 per cent lower than that of a similar renter - but the purchaser needs to have found the deposit to buy.

Data from Halifax, based on a three bedroom house, shows the monthly costs for first-time buyers are now £115 or 13 per cent lower than the cost of renting an equivalent home, with the difference potentially adding up to more than £27,600 over a typical 25 year mortgage.

The data refers to 2021 and says that during that year monthly rental costs grew six per cent to £874 while monthly buying costs grew two to £759 - that’s a full year difference of some £1,378.

Regionally, the biggest differences between rental and buying costs were in Scotland and the North West at 22 per cent, while the gap between annual rent and ownership in absolute terms was greatest in London where renting is £4,181 more costly. 

The smallest gap was seen in Northern Ireland, where renting was just £17 per month or three per cent higher than ownership. 

The Halifax mortgages director, Esther Djikstra, says: “Historic lows for interest rates have kept mortgage costs down, compared to rents. For the second year running, buyers in Scotland see the greatest proportional difference in costs compared to renters and are joined this year by those in the North West of England, where rents are over a fifth more than buying costs.

“Still, before homebuyers can benefit from lower monthly costs, a deposit needs to be put together, still the greatest challenge for many first-time buyers. 

“The £62,000 average deposit we see in our data may be an unimaginable sum to potential first-time buyers, but it’s much higher than many need to get a foot on their housing ladder.

“Deposits from 5% are available and, based on the average house price, mean putting down a £12,500 deposit - significantly less than the average.”