Renting v Buying:
Renting can typically work out as an option that is cheaper than buying over a 10 year-period, that’s according to research carried out by rentBunk.com and reported by Mortgage Introducer.
When all other costs are taken into account, such as upfront and monthly payments, the Bristol based lettings platform says:
“Across the UK the average monthly rent is £676. With the newly introduced five-week cap, that means a rental deposit costs an average of £845 and renting at this average monthly rate over a 10-year period would cost a total £81,120 – a total cost of £81,965 when including the deposit.
“The current average UK house price is £226,798 and so a 10% deposit would set you back £22,680. This leaves a loan amount of £204,118 and at a 10-year fixed rate of 2.58% would mean a total repayment of £231,798, a total of £254,478 including the deposit,” says Mortgage Introducer.
The conclusion is that renting works out £172,513 cheaper on average across the UK over 10 years, but the big difference of course is that there’s no long-term benefit of the terminal bricks and mortar investment secured buy buyers.
Renters benefit from a cheaper deal over the short term, if you can call 10 years short term, and they have the freedom of the landlord being responsible for everything, all repairs and emergency problems with the property, plus renters have the flexibility of mobility, if job opportunities arise elsewhere. Renters also have the opportunity to invest the savings into other types of investment which, who knows, my even out-perform property long-term.
Co-founder of rentBunk.com, Tom Woolard says:
“Of course the big difference between renting and buying is that one leaves you with a sizable financial asset as a reward for your years of hard work making mortgage payments.
“However, more and more of us are opting to rent long-term and what we wanted to highlight is that while the rental market is generally viewed in a negative light due to high rental costs, it is actually a considerably cheaper option when compared to homeownership, even with almost record low-interest rates.
“Not only this but those that feel resigned to renting due to the high financial barrier of buying actually have a much better opportunity to save compared to those paying a mortgage.
“Whether they choose to use this for a deposit further down the road or simply to enjoy a better quality of life is up to them.”
This saving, says Woolard, is greatest in Cambridge, the difference being £341,090 over 10-years, with the comparable figure for London at £316,247.
Bournemouth, comes in at £183,376 cheaper, Bristol (£177,613), Edinburgh (£166,547), Cardiff (£143,984), Southampton (£138,617), Portsmouth (£137,240) and Plymouth (£128,480).
Glasgow is the lowest city at a saving of renting over buying in 10-years at £43,145.