Renters in most areas of the UK are paying more on their monthly housing costs than they would if they bought the home they lived in, according to analysis.
Despite successive Bank of England rate rises over the past 18 months pulling mortgage costs up, someone living in a typical rental home would on average be paying more each month than had they had bought the property and were making mortgage repayments.
The figures, from Zoopla covering the first quarter of the year, come as new laws are set to be tabled in Parliament banning landlords from evicting tenants with no justification. The Renters’ Reform Bill – dubbed by some as the biggest shake-up of renters’ rights in decades will get its first reading in Parliament on Wednesday.
In the North East, the average monthly rent for a typical rented hme is £629, but mortgage repayments for the equivalent home are £468, assuming a deposit of 15 per cent.
This shows that if many renters were able to get together deposits and pass sometimes stringent stress testing on their earnings in order to get a mortgage, they would be able to save hundreds or potentially thousands each year on housing costs.
At the start of 2022, renters typically paid far more than mortgage holders each month in housing costs, with rent on typical rental properties costing £1,018 per month across the UK, compared to mortgage repayments on £849.
After successive rate rises from the Bank of England hike mortgage costs, the gap has closed, though rental costs are still slightly higher, at £1,126 per month compared to £1,123 for mortgages.
In London, mortgage costs were 11 per cent higher than equivalent renting costs, and many first-time buyers have to stump up large deposits to try to reduce costs.
Mr Donnell said that rising mortgage costs in some areas meant new buyers were looking for smaller properties.
He said nearly half (46 per cent) of first-time buyers wanted a three-bed house in 2021, but that this had now dropped to 40 per cent
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