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First-time buyers ‘£800 a year better off than renters typically’

Vicky Shaw, PA Personal Finance Correspondent
·3-min read

First-time buyers are saving more than £800 a year compared with if they were renting typically, analysis suggests.

Halifax said the cost gap between being on the property ladder and renting has widened over the past year.

Its “buying versus renting” review found that average monthly rental costs have increased by 10% to £821 in the past year, while the average monthly costs of being a first-time buyer home-owner have increased by 1% to £753 during the same period.

This adds up to a difference of more than £800 over a year.

Buyers in London are on average £4,606 a year better off than those renting, the research found.

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The slimmest gap between buying and renting is in Northern Ireland, where buyers were £539 a year typically better off than renters.

First-time buyers still need to find a £58,986 deposit on average to put down, the research found.

But, if they can find the deposit required to get on the property ladder, low interest rates have meant monthly mortgage payments have increased more slowly than rents, Halifax said.

Andrew Asaam, mortgages director, Halifax, said the average first home deposit has gone up by £11,000 since the start of the coronavirus pandemic.

He said a new Government-backed 5% deposit mortgage guarantee scheme, set to launch in April, could be a “gamechanger” for those saving hard to buy a home and often paying rent at the same time.

He added: “We have also committed to lending £10 billion in 2021 to help people buy their first home this year.”

The review was based on the typical costs of buying or renting a three-bedroom property.

Average buying costs included mortgage payments, income lost by funding a deposit rather than saving, spending on household maintenance and repairs, and insurance costs.

“One-off” costs, such as stamp duty, valuation and legal fees were excluded.

Mortgage payments were calculated based on average loans made to first-time buyers regionally, according to figures from trade association UK Finance.

Average rents were calculated based on data from BM Solutions – a buy-to-let brand from the same banking group as Halifax.

Here are the average monthly buying costs across the UK, followed by renting costs, according to Halifax, followed by the annual savings made by buying:

– North East, £484, £599, £1,380

– Yorkshire and the Humber, £557, £628, £863

– North West, £576, £723, £1,769

– East Midlands, £632, £706, £897

– West Midlands, £638, £756, £1,420

– East Anglia, £739, £907, £2,019

– Wales, £546, £665, £1,429

– South West, £773, £927, £1,839

– South East, £1,018, £1,232, £2,578

– London, £1,408, £1,791, £4,606

– Northern Ireland, £445, £490, £539

– Scotland, £527, £683, £1,868