Renting cheaper than buying in most of UK for the first time

RENTING is now cheaper than owning a home in all but three UK regions for the first time, as higher borrowing costs and a national shortage of homes take their toll.

Five years ago, just one region – the east of England – was cheaper to rent in than buy. Now, owning a home is less affordable than renting in every region bar the South West, Greater London and Scotland. The average monthly cost of owning a home is now £1,231, more than double the £578 it cost back in 2013 – according to new data from high street lender Halifax.

Over the past decade, first-time buyer mortgages have risen by 113 per cent but rental costs have risen by a lesser 82 per cent. The east of England has led the charge, with renters now £2,325 better off annually compared with owning an equivalent home.

Kim Kinnaird, Halifax’s mortgages director, said elevated borrowing costs and a lack of available homes to buy “is pushing ownership further out of reach for would-be first-time buyers in many parts of the country”.

Despite earnings having doubled since 1997, house prices have increased four-and-a-half times over the same

‘A lack of homes is pushing ownership further out of reach for would-be first-time buyers’

period. Homes are slowly becoming more affordable again – they cost 8.3 times buyers’ incomes last year, down from 8.5 times in 2022 according to the Office for National Statistics. But house prices still rose by £9,500 on average last year, compared with average earnings increasing by just £1,900 over the same period.

UK rents have continued to rise – by 6.2 per cent on existing tenancies in 2023, after rising by 4.2 per cent in 2022.

Tom Bill, of estate agent Knight Frank, said: “The story of the last two years has been a slowdown in transactions, not prices, which has made renting a cheaper option in some areas – even though the lettings market has suffered from a lack of supply.”

The Government was reportedly mulling “99 per cent mortgages”, where buyers could put down as little as a 1 per cent deposit, but this idea was dropped ahead of the Spring Budget, which included no help for first-time buyers.