City living? It's cheaper to buy than rent
With interest rates on the rise and many first-time buyers priced out of the market, millions are seeking rental properties. But research by property website Zoopla indicates that it is now cheaper to buy than rent in four out of five British cities.
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A typical first-time buyer property costs 9.7 per cent more to rent that it would to buy with an interest-only mortgage charging five per cent interest, the study found.
Low interest rates and a drop in property prices mean renting in cities across the country is considerably more costly than owning a home.
Milton Keynes for example, is reportedly the most expensive town in which to rent - a two bedroom house costs a massive 43 per cent more for tenants than for buyers. Birmingham was close behind with rental costs 37 per cent higher than mortgage payments, while rented homes in Warrington and York cost 29 per cent more than the mortgage on a comparable property.
Even those living in London would be well-advised to buy rather than rent, as an interest-only mortgage is 16 per cent cheaper on average.
However, there are some towns where renting is still the cheaper option, Poole, Plymouth and Stockport among them.
Of course, getting on the property ladder isn't easy and many first-time buyers are forced to pay the rental prices as mortgage lenders tighten their criteria.
Nicholas Leeming, business development director of Zoopla.co.uk, told the Daily Mail: "The relative cost of renting as opposed to buying has increased over the past 12 months as rents have risen and house prices and interest rates have remained flat.
"Almost 750,000 would-be first-time buyers have reluctantly ended up as renters over the past three years as a result of being unable to get a mortgage.
"With current house prices and interest rates where they are and with rents on the rise, for those who can get a mortgage, there may never have been a better time to buy."
What do you think? Are landlords cashing in on those priced out of the property market? Leave a comment below...
