Homeowners 'pay less than tenants'

housingOwning a home has become more than £100 a month cheaper than renting, with a widening gap emerging, research suggests.

Homeowners who have taken out recent deals typically pay £600 a month for a three-bedroom house, amounting to £116 or 16% less than the average of £716 paid a month for renting one, the Halifax found.
Wales is the only area of the UK where renting is cheaper than buying, with owning a home costing £5 a month more than renting.

Buying is most affordable relative to renting in London, with the average borrower paying £1,089, 10.2% less per month than the typical private tenant.

The overall figures show a significant about-turn since 2008, when the average cost of owning a home was £928, 29% higher than typical monthly rental costs of £721.

Halifax said the reduction in home buying costs was driven by falling mortgage rates as well as house prices.

The mortgage rate for a new borrower has fallen from 5.75% on average in 2008 to 3.63% last year, as lenders have been offering some of their cheapest ever deals due to the Bank of England's historic low 0.5% base rate, while average house prices have dropped by 11% over the same period.

As well as calculating the mortgage payments of the average new borrower, researchers also included household maintenance, repairs and insurance in home buying costs.

However, would-be buyers still face the hurdle of raising a deposit and are also likely to face a tougher time raising a mortgage this year, with lenders expected to tighten their borrowing criteria amid the weak economic backdrop.

Typical rents have been pushed up as those who would like to buy have been left trapped in the rental system and concerns have been raised that transactions could hit a record low this year.

© 2012 Press Association
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