UK renters paying up to 18% more than homeowners

Renters are paying up to 18% more each month than those who own their own homes in some parts of the UK, according to new research published by Halifax.

The latest Halifax Buying vs. Renting Review revealed the gap is greatest in London, where homeowners save 18% on average – equating to £3,727 annually – followed by the South-East (17%), South-West and Scotland (both 16%).

Buyers across all UK regions were revealed to be saving in excess of 10% in comparison to renters in the same area, except for Yorkshire and The Humber, where the Halifax data showed homeowners are saving just 3% on average – £235 per year.

Halifax’s research compared the housing costs associated with a mortgage on a three-bed home against the average monthly rent for the same type of property.

Halifax managing director, Russell Galley, commented: “The overall gap between home buying and renting is at its smallest margin for 10 years, but this masks some significant regional variations where homeowners are making some considerable savings on monthly costs.

“While Londoners stand to save the most from home ownership compared to renting, buyers in the South-East and South-West of England and north of the border in Scotland are also reaping the benefits. Buyers in two-thirds of UK regions are saving upwards of £1,000 a year from living in a home they own, with the smallest saving for homeowners in Yorkshire and Humberside at £227.”

At a UK level, Halifax found homeowners are saving 3% on average, with this gap declining from 17% year-on-year since 2015 – when buyers were saving an average of £1,476 per year, or £123 per month.

This was a reverse of the trend recorded in 2009 when buying was more expensive, and renters saved on average £209 per year, or £17 per month.

Furthermore, the Halifax report revealed that with house prices increasing over the last 10 years, average monthly buying costs have also increased by 26%, or £150, driven by an increase in the average mortgage payment and a rise in the amount of the average deposit. Halifax indicated the cost of renting has increased by 33% over the past 10 years to an average £747.

Head of retirement strategy at Altus, Jon Dean, called the gap a ‘concern for two reasons.’

He said: “Not only are renters paying more in housing costs, but having not sought mortgage advice, are far less likely to have considered their protection needs.

“According to the Money and Pensions Service, 11.5 million people have less than £100 in savings to fall back on. Sudden loss of income through inability to work can have a catastrophic effect, and for renters without income protection this would mean they are unable to make their monthly payments.”

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