Almost £1,000 a year richer if you buy rather than rent

FIRST-TIMe buyers in Scotland are on average £860 a year better off than those who rent, say Bank of Scotland analysts.

The average monthly cost of buying a three-bedroom house, i ncluding a mortgage, was £522 in December.

This was £71 lower than the typical monthly rent of £ 593 on the same property type.

Over the past year, the gap between buying and renting has narrowed by £50 per month, the report found.

At the end of 2015, the monthly cost for buyers was £121 lower than renting. The cost for first- time buyers has been cheaper than renting since 2009.

Bank of Scotland director Graham Blair said: ‘This is the eighth year in a row that first-time buyers in Scotland are better off buying a property rather than renting. Over this period of time, buying costs have not fluctuated much, resulting in the annual saving increasing from £458 to £860.

‘While it is also the more financially attractive option across the UK to buy rather than rent, it is more affordable in Scotland. Buying here is 12 per cent cheaper than renting, compared to the UK’s 7 per cent cheaper.’

The number of first-time buyers north of the Border reached 23,000 last year, remaining above the 20,000 mark for the third successive year.

The number of home buyers getting onto the first rung of the property ladder has grown by 87 per cent since 2009 to its present level. But first-time buyer numbers remain 21 per cent below the immediate pre-crisis peak of 29,200 in 2006.

Mr Blair said: ‘The size of deposit that is often required can represent a substantial hurdle to overcome before r eali s i ng t he potential f i nancial advantages of home ownership.

‘While deposits can raise the upfront cost of buying, it is also an important form of long-term savings and contributes towards higher housing wealth.’

According to figures from the Office of National Statistics and the Land Registry last week, house prices in Scotland continued their ‘steady growth’ over the past year.

The Shetlands saw the biggest rise in house prices in the UK last year, up 26.1 per cent to £178,947, while the biggest price increase on the mainland was in east Renfrewshire, where the average price rose 15.4 per cent to £220,072.

Aberdeen had the biggest fall, with prices down 9.8 per cent to £167,608.

The average price of a property in Scotland in December last year was £141,553 – a rise of 3.5 per cent on the previous year.