Buying a home cheaper than renting

Rising rent payments combined with lower property prices and mortgage rates now mean that on average, property owners pay 18 per cent or £132 a month less than those who rent, according to Halifax.

The lender said that average monthly costs for buyers of a typical three-bedroom house, including mortgage payments and household maintenance and repair costs, were £600 in June, against £732 in rent paid on the same type of property.

Roger Harding, head of policy and research at housing charity Shelter, told Channel 4 News: “It’s common knowledge that renting is fast becoming a way of life for a whole generation of Britons locked out of the housing market, with over a million families now renting their home from a landlord.

“Many rents are now more expensive than mortgage repayments, yet renters must live with the knowledge that their rent could be increased at any time or they could lose their home with just two months notice. It’s the worst of both worlds.”

Rent payments have risen steadily in the past few years, up 5 per cent in the past year alone, while buying costs have fallen 3 per cent.

Four years ago, the average cost of buying and owning a home cost 45 per cent (or £324) more than the average monthly rent paid.

But despite the improvements in affordability, the number of new buyers in the market has fallen by a dramatic 33 per cent in the last four years as lenders are demanding higher deposits and mortages have become increasingly difficult to secure.

However, in July, a record 9,537 complaints were made to the financial ombudsman service in the financial year to the end of April 2012, with more than a third of those from people in “severe financial difficulties.” The number of complaints was up a third on the previous year.

Considerable uncertainty

The average loan-to-value (the amount that lenders demand as a deposit) now stands at around a quarter of the property price, at £40,526.

Read more: Rising rents among economic uncertainty

Martin Ellis, housing economist at Halifax, said: “Those getting on the housing ladder still face challenges, most notably in getting a deposit, and this challenge, along with the considerable uncertainty regarding the economic outlook, is still contributing to subdued housing demand.

“However, it is worth noting that once homebuyers are on the first rung, their monthly costs are notably lower.”

The research shows that owning a home was more affordable than renting in all 12 regions across the UK.

In London, the typical homebuyer pays 14 per cent, or £177, a month less than the average renter.

The difference is the smallest in the east Midlands, where a homeowner pays 2 per cent less a month than someone who rents.

A record low bank base rate of 0.5 per cent since the financial crisis struck has seen the average mortgage interest payment fall to 3.82 per cent in June from 5.91 per cent in June 2008.

The typical UK house price has fallen by a tenth over the same period.