Real estate UK – is it cheaper to buy or rent?

The largest real estate website Zoopla has published a study of the real estate market in the UK, making a comparative analysis of costs of consumers buying homes and renting.

The difference between the purchase price and costs for rental housing in the UK is gradually declining, the growth of prices for residential property in the UK. The purchase of the property is 13% more profitable than renting. But now, the purchase will cost 3.2% more than the same time a year earlier. Rent an average apartment in the UK for two bedrooms will cost about £961 per year more expensive than purchasing the same apartment in the property.

The greatest effect of the purchase would be in the region of York, and in the area of Plymouth, on the contrary, it is better to rent a property. A year ago, the average difference in cost between renting and buying a similar apartment in the UK was £993 per year, as can be seen, the difference decreased by 3.2% to £961 . While the share of cities in the UK where it is cheaper to buy than rent has fallen from 90% to 86% over the past 12 months. The main reason for the gap is that housing prices grew more rapidly over the last 12 months than rents.

Despite the fact that the gap is narrowing, buying a property is still cheaper rent by 13 %. The average rent for a typical two bedroom apartment in the UK is now about £8006 a year. The cost of servicing the debt on the mortgage the same apartment with loan scheme “interest-only” is £7045 per year at the rate of 5%.

If you get a mortgage with a down payment of 10% of the scheme “interest-only”, the typical rate will be about 4.39 percent, the benefit will be even higher. At an average cost of the loan to £126817, the amount of interest you pay is £464 per month, which will save £2439 per year. The reduction in the growth rate of housing prices in the North means that Northern cities dominate the list of places where it is cheaper to buy than to rent. First in the list of York, with a difference in favor of buying housing £3326 pounds a year.

Very high housing prices in the South of the country led to the fact that in some places it is cheaper to rent property than to buy. The cities are headed by Plymouth, where tenants will pay £ 845 (15%) less per year than property owners. Property owners in London will pay more than leaseholders, despite rising rents. But the difference is insignificant, only 6 %.

In the whole country buying real estate property is more cost-effective than renting, but the gap is narrowing, With the increased availability of mortgage loans, the demand from buyers is growing, and it stimulates the growth of the cost of housing. And housing prices are growing faster, as there is a natural reaction to the rents which only a few months older as appreciation of real estate.

After York, who holds the palm of the areas where buying cheaper than renting, followed by Coventry city, hull and Bradford. Among the cities, where a more profitable rent, after the Plymouth should be allocated to Swansea, Bournemouth, London and Stockport.

® Helen G. Antre 16.06.2013