It’s better to buy than to rent... but not by much

It’s usually better to buy your home than rent – provided you can find the deposit. But the financial benefit of buying versus tenancy is now the lowest in almost 10 years. That’s the conclusion of the latest Buying vs Renting Review from lender Halifax.

It looked at the pounds and pence involved in these options on a month-to-month basis, taking in costs homebuyers have to cover against those for renters, where landlords pick up more expenses.

In 2018, buyers were £366 a year – £7 a week – better off than renters. But that’s sharply down from the previous year, when the purchasers could keep £900 a year – around £18 a week – more.

And last year’s figure is the lowest buying advantage since 2010. In 2008 and 2009 it was cheaper to rent, as mortgage costs were high and many landlords desperate. At the end of 2008, tenants were more than £3,000 a year wealthier than buyers of similar homes. But since 2010, the gain had swung back to buyers.

Now the advantage is with purchasers – but much depends on where you live. Buyers just getting onto the property ININ ASSOCIATIONASSOCIATTIIOONN WWIITTHH ladder are a massive £4,450 a year better off in Greater London – helped by falling house prices in the capital, reductions which landlords generally do not pass on to tenants.

Outside of London, Scottish first-time buyers have the highest average annual savings, paying £1,574 less than tenants. Renters in Yorkshire get the best deal, only paying five % more than buyers.

The figures for buying include costs renters won’t pay. Landlords pick up buildings insurance premiums whereas anyone with a mortgage has to shell out for this. Tenants should be protected from maintenance expenses – this can vary with rental agreements but major items such as re-roofing or replacing rotten windows should be included.

The numbers also factor in the cost of the deposit homebuyers need to get a mortgage. They can’t bank this money so they can’t get any interest on the amount, but as savings rates are so low, this adds up to very little each year – about £15 for the average purchaser.

Halifax director Russell Galley says: “The advantage of buying over renting is narrowing, mainly due to continuing house price growth, meaning buyers are paying more on their mortgages. Meanwhile, the cost of rent, household maintenance and other expenses have remained broadly flat, leading to better deals for renters.” Above: Renters do not have to factor the upkeep of the house, including replacing windows It’s worth weighing up the costs, benefits and responsibilities of buying and renting