Buying better than renting in 94% of UK towns

Updated: 

housesPA

Buying a home now beats renting in 94% of British towns - 47 of the 50 largest towns across the country.

High rental demand, due to the difficulties would-be buyers face in getting financing, coupled with low mortgage rates has made buying property in Britain more attractive today than it has ever been.

Figures from property website Zoopla.co.uk show a significant increase on this time last year, when it was better to buy than rent in only 40 out of the same 50 towns. The continued mortgage drought and the rising demand for rental properties has led to renting costing 15% more on average than buying, up from only 10% more this time last year.

To compare the cost of buying versus renting, Zoopla analysed the current asking prices and rents of over 78,000 two-bedroom flats currently on the market, comparing the rental cost to the cost of ownership based on servicing an interest-only mortgage at 5% a year.

Swansea, Plymouth and Bournemouth are the only three on the list of 50 towns where it remains cheaper to rent than buy today. In contrast, Milton Keynes comes top of the list of locations where buying beats renting and where renting is 36% more expensive than owning, leaving renters £2,436 per year worse off on average. Warrington and Walsall also feature highly on the list of places where it is cheaper to buy than rent, at 33% and 32% rental premiums respectively.

In London, where the average asking price for two-bedroom flats currently stands at £442,036, buying also trumps renting by a big margin. With average monthly rents in the capital at £2,416, renting is 31% more expensive than the cost of ownership, leaving renters paying an extra £6,888 annually on average compared to owners.

Nicholas Leeming of Zoopla.co.uk said: "Although buying may be more cost-effective than ever compared to renting, many potential buyers aren't able to take advantage because they can't access mortgage finance. The shortage of financing, especially to first time buyers, has pushed demand for rental property through the roof. But for those lucky enough to be in a position to get a mortgage, there may never have been a better time to buy."

LOCATIONS WHERE RENTING RULES OVER BUYING

Rank

Location

Avg. Monthly Rent*

Avg. Asking Price*

Rental Discount**

1

Swansea

£653

£172,871

-9.3%

2

Plymouth

£618

£158,693

-6.6%

3

Bournemouth

£756

£192,456

-5.7%




TOP 10 LOCATIONS WHERE BUYING BEATS RENTING

Rank

Location

Avg. Monthly Rent*

Avg. Asking Price*

Rental Premium**

1

Milton Keynes

£756

£133,217

36%

2

Warrington

£601

£108,604

33%

3

Walsall

£507

£92,031

32%

4

Coventry

£582

£105,850

32%

5

Northampton

£587

£106,925

32%

6

York

£866

£158,127

31%

7

London

£2,416

£442,036

31%

8

Wolverhampton

£505

£92,590

31%

9

Swindon

£597

£110,574

30%

10

Birmingham

£706

£130,937

29%

Source: Zoopla.co.uk

* Based on 2 bedroom flats on the market for sale/rent in November 2011

** % variance between monthly rent and interest-only mortgage payment at 5% pa



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