The cost of servicing an interest-only mortgage is lower than the cost of renting the equivalent property in 44 of the 50 largest towns and cities across Britain, according to the latest research from property website Zoopla.co.uk.
Average rents for all two bedroom flats available outside London currently stand at £659 per month while the average asking price for all two bedroom flats currently for sale outside London is £139,451.
Owning one of these properties and servicing an interest-only mortgage at a conservative 5% per annum would cost £581 per month, making renting 13% more expensive and leaving buyers nearly £1,000 per year better off.
Places where buying beats renting by the biggest margin include York, Milton Keynes and Derby. At the other end of the spectrum and bucking the overall trend of buying being better, renting remains the cheaper option in Bournemouth, Swansea and Oldham.
In London, renting is even more expensive than buying compared to the rest of the country, with average rents running 17% higher on average than servicing a mortgage. With current asking prices for two bedroom flats in the capital at £483,069 and the average rent on an equivalent property at £2,362 per month, owners in London are £4,200 per year better off than renters.
“Whilst buying is clearly the better option than renting at the moment based on our research, the difficulty in saving for a deposit and the tight lending conditions are preventing huge swathes of would-be buyers from taking advantage of the current lower cost of owning a home,” said Lawrence Hall of Zoopla.co.uk.
“And with more potential buyers being forced into the rental market, rents are rising based on the higher demand.”