Data gathered by property website Zoopla show that owning is better than renting in the United Kingdom (UK). The report indicates that owners who have a 5% interest-only mortgage save about £1,098 per year on property costs. The average fluctuates based on the specific location a person owns or rents, and Reading has been pegged as the place where the savings contrast is greatest. Swansea and London, on the other hand, are places where renting will save a person more money. Experts say that regardless of the pros or cons, the rental market remains highly competitive and will likely remain so. For more on this continue reading the following article from Property Wire.
Owning a property in the UK with an interest only mortgage instead of renting saves £1,098 per year on average, according to new research.
The average rental payment on a two bedroom flat across the UK is £8,258 per year, £1,098 less than the cost of servicing a 5% interest only mortgage on a similar property, which currently stands at £7,160 per year, says the research by property website Zoopla.
The savings to be had from buying instead of renting is equivalent to 4.2% of the average full time salary in the UK which is estimated at £26,200. The research also says that renting is now the cheaper option in only six of the 50 largest towns and cities across the country.
Reading leads the pack in terms of places where buying is most cost effective, with owners paying 34% less than renters on average. Outside Reading, the North dominates the list of places where it is now materially cheaper to own than rent as rents have climbed more steeply than house prices, with York, Peterborough, Aberdeen and Hull all in the top five. Only one other location in the South, Milton Keynes, made the top 30 most cost effective places to buy.
Swansea tops the list of places where renting remains more cost effective than owning, with renters paying 11% less on average. And, renting in London is now a better option than buying thanks to rapidly increasing house prices in the capital which have climbed 5.9% on average over the past 12 months, with London renters now saving 9.5% per year over buyers. Bournemouth, Bedford and Middlesbrough round out the top five places where renting currently rules.
‘Despite the improved first time buyer market over the past year, demand for rental accommodation is still fierce. Thousands of people who want to buy are still being forced into the private rented sector every month, which is pushing rents up,’ said Lawrence Hall of Zoopla.
‘Provided you can get a mortgage, buying is generally the more cost effective option, particularly in the north, where house prices are lower and rising at slower rate than in the south.
;However, if property prices continue to increase quickly the tables may turn and monthly rent payments could become cheaper than the cost of servicing a mortgage. That has already happened in London, where house prices rises have pulled away from the rest of the country and are rising at a faster pace than rental costs, which has now made renting the cheaper option,’ he added.
This article was republished with permission from Property Wire.