Once, renting a house was the logical way to save up to buy a home of your own – but not anymore.
In fact, it is cheaper to pay a mortgage on a three bedroom house than it is to rent a similar property, a major report reveals today.
On average, a homeowner spends around £130 per month less than a typical tenant who is renting an identical property, according to Halifax. This gap – the largest ever recorded by the bank – means a homeowner is £1560 better off by the end of the year, equal to one month’s take-home pay for the average full-time worker.
And while the homeowner will have shrunk their mortgage during the year by making monthly repayments, the tenant has simply lined their landlord’s pocket. The report reveals how millions of families, young couples and students are being penalised by the highest rents ever charged in Britain.
Meanwhile, homeowners are benefiting from cheap mortgage deals following the Bank of England’s decision to cut interest rates to an historic low in March 2009. The report from Halifax, published today, looked at a three bedroom house, which currently costs £157,400 on average.
For the homeowner, the average monthly mortgage payment, including other ‘buying’ costs, is £600. For the tenant, the monthly rent bill is £732. ‘Buying costs’ are mainly the loan repayments, but also include the cost of household repair bills, minor alternations and insurance. This is a difference of £132, or 8%, the widest gap ever recorded by the Halifax since it started to conduct the annual survey in 2008.
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