It’s cheaper to buy than rent across all but one part of the UK says Zoopla. But that depends on buyers being able to afford the deposits.
The portal says first-time buyer mortgage payments at £1,038 per month are now 20% lower than average rent of £1,248 per month across Britain.
However, the analysis assumes an average 20% deposit is paid equivalent to £50,740 on a typical first-time buyer property typically costing £253,700.
In London the analysis assumes a 30% deposit.
Zooplal analysed the cost of renting and buying across 118 British postal areas.
Servicing a mortgage is some 30% below rental costs in Glasgow and areas in northern England including Newcastle, Liverpool and Cardiff. And it costs more than renting in 10% of postal areas led by the Harrogate postal area where buying costs 15% more than renting followed by the Watford (WD) postal area at 7%.
But affordability challenges remain for renters, the portal insists.
An average 20% deposit on a typical first-time buyer home ranges from £27,700 in the North East, to £83,400 in London. Many first-time buyers rely on family support for help with deposits, with 63% admitting that they received help from family members when buying their first home.
Richard Donnell, executive director at Zoopla, says: “Our renting versus buying analysis is welcome news for would-be first-time buyers looking to buy their first home, having faced steep increases in rents over the last three years. There remain challenges facing first-time buyers, especially those on average incomes or with small deposits. Mortgage regulations introduced in 2015 to stop a housing market boom and bust have created a higher hurdle to home ownership for those on middle incomes, who can afford to make rental payments but are unable to prove they can afford higher mortgage ‘stress’ rates should borrowing costs increase in the future. The more first-time buyers priced out of home ownership, the greater the pressure on the private rental market and rental levels.
“Proposals to review regulations around mortgages are welcome. We do not want to return to the loose lending that preceded the global financial crisis. A modest loosening in lending rules with mortgage stress testing rates closer to 6-7 per cent would help more middle to higher income renters access home ownership and ease some of the pressure in the rental market without causing a boom in house prices.”
| Area | First-time buyer property price | 20% deposit | Mortgage repayments £pcm at 4.5% and 30 year term | Average rent £pcm | Mortgage costs versus rent costs | Difference between repayments and rent |
| North East | £138,500 | £27,700 | £567 | £748 | -24% | (£181) |
| Yorks and Humber | £161,900 | £32,380 | £663 | £839 | -21% | (£176) |
| North West | £176,900 | £35,380 | £724 | £915 | -21% | (£191) |
| Wales | £179,900 | £35,980 | £736 | £929 | -21% | (£193) |
| Scotland | £165,700 | £33,140 | £678 | £835 | -19% | (£157) |
| West Midlands | £207,700 | £41,540 | £850 | £960 | -11% | (£110) |
| South West | £250,700 | £50,140 | £1,026 | £1,124 | -9% | (£98) |
| London | £417,200 | £83,440 | £1,708 | £1,822 | -6% | (£114) |
| East Midlands | £217,800 | £43,560 | £891 | £903 | -1% | (£12) |
| South East | £332,800 | £66,560 | £1,362 | £1,380 | -1% | (£18) |
| East of England | £317,100 | £63,420 | £1,298 | £1,228 | 6% | £70 |
| GB | £253,700 | £50,740 | £1,038 | £1,284 | -19% | (£246) |
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