Homeowners earn almost £500 a year compared to renters, new figures reveal.
The monthly cost of owning a home for first-time buyers is £971 on average, according to Halifax. That’s 4% – the equivalent of £42 – less than the rental cost of a similar property.
The banking giant’s findings came despite mortgage rates skyrocketing over the past year, but the gap between owning and renting has narrowed significantly due to rising borrowing costs.
Halifax based its findings on first-time buyers with a mortgage on a three-bedroom house, compared to the average monthly rent on the same type of property.
Halifax findings are based on buying or renting a three-bedroom property
Halifax has revealed the average monthly landlord costs and rent payments in Britain
While landlords typically pay £971 per month, those renting a property pay £1,013 per month.
This equates to nearly £500 in savings for owners. The gap is down from its peak in 2016, when owners saved £1,567 a year.
The biggest gap in Britain between homeowners and renters, in percentage terms, is in Scotland.
Those who rent in Scotland pay an average of £918 per month, compared to £727 for owners, a savings of 21% for those on the homeownership ladder.
It’s a different story in the East of England, the only region or nation in Britain where it is more expensive to own a property than to rent the equivalent. Homeowners there now pay £90 more a month, on average, than renters.
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This table shows the average monthly homeownership and rental costs by region
The biggest benefits, in terms of cash flow, are seen in London, where landlords save nearly £3,000 a year compared to those renting similar properties.
Kim Kinnaird from Halifax said: “The transition from renting to owning can be difficult for many as raising a sufficient deposit and then finding the right property can be difficult.
“While an expected drop in house prices this year will be good news for those looking to buy their first home, it doesn’t change the fact that climbing the property ladder remains expensive – an issue that is aggravated when rents are high, impacting the ability to save.’
This chart shows the average home price, mortgage advance, and deposit for first-time buyers
The latest Halifax first-time buyer data shows that in terms of cash, deposits on properties in the North East are the lowest in Britain at £32,920, around 19% of the average home price real estate in the region.
Outside of London – where first-time home buyers raise an average of £188,663 – properties in the South East and East of England also require large deposits from new owners, at £97,320 and £87,157 respectively.
Separately, data from HomeLet shows the average rent in Britain was £1,175 a month in February, up 0.3% from the previous month.
Outside London, the average rent is £983 per month, up 0.6% from the previous month.
By contrast, rental prices in London continue to fall – although cash-based rents remain significantly higher than elsewhere in the country.
A study by SpareRoom found that 82% of tenants didn’t move even if they wanted to because available properties were out of budget
The area saw the biggest monthly fall, with rents down 0.7%, falling below their previous average of £1,989 per month to £1,975 per month.
New research from SpareRoom reveals that nearly three-quarters – or 72% – of renters who haven’t moved in the past 18 months said they chose to stay put even though they’d rather move.
The survey of 4,000 tenants suggested the main reason – at 82% – was that available properties were out of budget.
Matt Hutchinson of SpareRoom said: ‘The current rental market isn’t working for anyone. Tenants are stressed and struggling, landlords are leaving the market, and our workforce is becoming less flexible by the day.