Buying cheaper than renting in 80% of the country
Despite the recent trend of house prices beginning to steadily rise, figures released by the property website Zoopla have revealed that it is still cheaper to buy a property than rent in the UK, for over 80% of the country.
The figure is actually down from 94% at the end of 2011 but does show that it still makes more sense financially to look into buying a property than to continue renting in most towns in the UK. Of the only towns and cities bucking the trend, Swansea, Oldham and Cambridge top the list, with rents actually working out cheaper by sometimes quite a large margin (over 8%). However, in 42 out of 50 towns and cities it has been proved that paying rent just doesn’t make sense any more, if you are in a position to buy.
Despite this information, there is still high tenant demand all over the country and with rents rising and less properties available, the rental market is actually booming, whilst the buying market remains slow moving. This may be down to the fact that although making monthly repayments on a mortgage may work out cheaper than paying rent on a property of the same size, it still requires a large chunk of cash to get started with buying a property in the first place.
To get the best deals on a mortgage people need to be looking at an average deposit of around 10% of the property’s value and recent figures have shown that the average deposit is over £28,000. Many lenders are still not lending mortgages on more than a 90% LTV, especially those lending contractor mortgages, so finding this money can be a struggle for people looking to buy.
Add to this that buyers need to find the money for arrangement fees, stamp duty, legal and valuation fees, and the initial payout for a property can be in the tens of thousands, an amount which is just not feasible for many people. If they are not in a position to borrow the money from family, a lot of younger potential buyers have to remain renting until they can save up enough to start thinking about buying.
For those that can afford to buy, though, now is the perfect time as property prices are still low and continuing to fall, and the Bank of England base rate has failed to rise from the historical low of 0.5% it dropped to three years ago.
Article by: Susan Grant, Senior Mortgage & Financial Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager.
Tel: 0844 44 88 800