Buying property is cheaper than renting in 90% of the top 50 towns in Britain, with York, Peterborough and Reading the most expensive to rent versus owning, according to the latest data released from property website Zoopla.co.uk. The research shows that servicing an interest-only mortgage on an average property in Britain costs £1,080 less per year than the cost of renting, with the average asking rent for two bedroom flats nationally currently stood at £668 per month, while the average asking price of equivalent properties currently stands at £138,769.
Cost-Saving Potential with Interest-Only Mortgages
Servicing an interest-only mortgage at 5% pa would cost £578 pm, representing a saving of £90pm or £21pw compared to renting and leaving renters £1,080pa worse off compared to owners. Using a 90% LTV interest-only mortgage at a typical Best Buy rate of 4.39%, the cost of renting is even higher. The average mortgage on a two bedroom flat would stand at £124,892 with an interest cost of £457 pm, saving the average owner £2,532 p.a., not including the cost of the 10% deposit.
Locations with Significant Rental Premiums
York tops the list of places where renting is currently most expensive compared to buying, with a 76.1% rental premium. Peterborough, Reading, Milton Keynes and Northampton all also have significant rental premiums and are much more cost effective places to own rather than rent. At the other end of the scale, it is currently more cost effective based on asking prices and rents for available properties to rent in Swansea, Cambridge, Bournemouth, Dundee and Huddersfield. Lawrence Hall of Zoopla.co.uk, said: “The cost of renting continues to balloon as a result of first-time buyers continuing to struggle to get affordable financing. Even for an interest-only mortgage, it’s generally much more cost-effective to buy. Property prices are low by historic standards, and sellers struggling to sell are reducing asking prices, meaning there are still some bargains to be had for those lucky enough to be able to get a mortgage.”
Article courtesy of Property Investor Today“”
