Renters are £27,000 worse off than first-time buyers, according to the latest Halifax Buying vs. Renting Review.
Findings show that the average monthly rent for a three-bed property stood at £754 in December 2017, while the average monthly cost of buying a similar home was £679.
Over the course of a 30-year mortgage term, the difference between these two figures adds up to £27,000. With the average deposit standing at £31,751, the financial disparity between renters and buyers is significant.
The gap between the cost of buying and renting now at its highest level in four years and in the last year alone it has increased by 44%.
As a result, it’s unsurprising how many people are striving for homeownership. However, despite renters’ ambitions to get on the property ladder, the cost of renting makes it incredibly difficult to save a deposit for a home
Russell Galley, managing director at Halifax said that the increased gap was “primarily driven by a reduction in mortgage rates and a more competitive market pushing down monthly payments.
“Meanwhile, the cost of rent, household maintenance and average deposits have remained broadly flat.
“Despite having to put down a sizeable deposit up front, homeowners are overall better off than renters in all parts of the UK. But those who are unable to get onto the property ladder because they can’t raise enough cash are paying more by renting.”
Not only is renting more expensive, the average monthly cost of buying has decreased by 22% (£192) since 2008.
Homeowners in London save the most when they buy a property and pay £183 less each month on average, although buying a property is still incredibly expensive within the capital.
Government schemes such as the Help to Buy ISA, Lifetime ISA, and the recent stamp duty changes are indeed helping first time buyers to save a deposit. However, many have argued that those who benefit most from such schemes are those in a position to save a deposit anyway.
