According to the last Zoopla’s research, it is much cheaper to rent a home in 54% of the cities in Great Britain than to buy it. In London the costs of rent is nearly double cheaper. At the same time, for example, in Glasgow ( Scotland), it is more profitable to buy the property than to rent a house.
What’s the research found?
Zoopla’s data demonstrated that the amount of average monthly rental ( a two-bedroom home was taken for a basis) costs around £690, while the average mortgage repayment of such property is coming to £737 in 50 Britain’s cities, which were taken for evaluation. Mortgage repayments were calculated for 90% of the average value of loans for a similar home (2 bedroom) in the same city with an 4,5 % interest rate of loan.
The research showed that Londoners profit more when they rent, paying 47% less (average £1,861 for rent) than when they invest to buying a home and have an average mortgage payment ( around £3,001).
Where is this happening?
Since October 2016 the quantity of locations where it’s twice cheaper to lease a home in comparison with buying the one has become greater by 14% in the country. As Zoopla showed it had become more cost-effective to rent a house or an apartment in 40% of cities across Britain.
However, Zoopla’s representative Lawrence Hall noted : "... while renters may be more beneficial in the short-to-medium term in some locations of the country, acquiring a property is a long-term investment..., buyers are likely to benefit overall if compared to those who prefer to rent”. So bare number can’t be applied for definite situations and for the future results. But they show the tendency for nowadays and should be analyzed by customers, choosing their options for a home.
Which places are affected and who profits?
The most effective city for such deal is London. Those who participate in the lease-versus-mortgage scenario, save the most ( nearly 50%). Renting is more financially profitable than buying in: Cambridge ( 30% of savings), Brighton (27% better ), Reading (26%), Bedford ( around 24%), Liverpool (23%), Southampton (20% cheaper), Bristol (16%), Oldham(14%) and Bournemouth (14%).
It is important to assume that the better value of renting versus the average mortgage payment each month, demonstrated here, is the most suitable for the first-time buyers. Many of the existing homeowners are having more than ten percent equity in their property, besides they pay mortgage rates less than 4.5%.
Where the situation is contrary?
The situation is not similar in all parts of Great Britain. As it was analyzed, buying a home in Glasgow has appeared to be cheaper than its renting. Servicing a mortgage here is 31% lower than paying monthly rent.
Next comes Dundee, where this dependence is 29% less (£549) for each month. The same situation is in Yorkshire, Barnsley, Bradford and Leeds. These cities rank in the list of the top 10 areas where buying is more beneficial than long-term renting.
|
Top 10 locations where renting beats buying: |
|||||
|
Rank |
City |
Average monthly rent |
Average asking price of 2-bed home |
Average mortgage repayment (based on 90% loan) |
Buying premium |
|
1 |
LONDON |
£1,861 |
£599,950 |
£3,001 |
-47% |
|
2 |
CAMBRIDGE |
£1,099 |
£297,498 |
£1,488 |
-30% |
|
3 |
BRIGHTON |
£1,199 |
£315,000 |
£1,576 |
-27% |
|
4 |
READING |
£1,000 |
£260,000 |
£1,301 |
-26% |
|
5 |
BEDFORD |
£764 |
£195,000 |
£975 |
-24% |
|
6 |
LIVERPOOL |
£623 |
£156,750 |
£784 |
-23% |
|
7 |
SOUTHAMPTON |
£779 |
£189,750 |
£949 |
-20% |
|
8 |
BRISTOL |
£900 |
£210,995 |
£1,056 |
-16% |
|
9 |
OLDHAM |
£476 |
£109,950 |
£550 |
-14% |
|
10 |
BOURNEMOUTH |
£848 |
£194,975 |
£975 |
-14% |
Source, Zoopla April 2017
|
Top 10 locations where buying beats renting: |
|||||
|
Rank |
Location |
Average monthly rent |
Average asking price of 2-bed home |
Average mortgage repayment (based on 90% loan) |
Rental Premium |
|
1 |
GLASGOW |
£649 |
£95,000 |
£475 |
31% |
|
2 |
DUNDEE |
£549 |
£82,000 |
£410 |
29% |
|
3 |
COVENTRY |
£775 |
£125,000 |
£625 |
21% |
|
4 |
BRADFORD |
£493 |
£79,998 |
£400 |
21% |
|
5 |
BARNSLEY |
£450 |
£75,000 |
£375 |
18% |
|
6 |
LEEDS |
£736 |
£125,000 |
£625 |
16% |
|
7 |
MIDDLESBROUGH |
£497 |
£84,950 |
£425 |
16% |
|
8 |
BOLTON |
£493 |
£85,000 |
£425 |
15% |
|
9 |
BIRMINGHAM |
£749 |
£130,000 |
£650 |
14% |
|
10 |
WALSALL |
£523 |
£91,000 |
£455 |
14% |