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News - 20 February 2013

Is buying a house cheaper than renting?

According to recently published figures from one of the leading mortgage providers in the UK, the combination of plummeting mortgage costs and soaring monthly rents has meant that buying a home is now on average £120 cheaper than renting across the UK – and the gap has widened in the last year

Average mortgage costs, on a three-bedroom house, are £621 a month, compared to typical monthly rent of £741, says the bank. Over a year this amounts to a healthy saving of £1,140 for homeowners. However, the differences can vary depending which part of the country you are in.

So on the whole; buying appears to be the best option. But what about the deposit?

The figures supplied by the mortgage provider are based on monthly repayments on an average of 73% of the loan-to-value (LTV) – or in other words, after the buyer has put down a 27% deposit.


Based on their most recent figures the Halifax says that the average UK property price is just under £163,000, and 27% of this is £44,000.

Lavinia Newman, founder of ABDS comments:
“Those with less to put down will naturally have a larger mortgage, which will be more expensive to repay. And remember that lenders charge higher rates of interest to borrowers with small deposits, so you could find that buying doesn’t end up as cheap as you first thought compared to renting.”

Christine Matthews, Property Manager at ABDS comments
“Renting has a lot going for it. First and foremost, it gives you a level of freedom that is simply not possible when you are a homeowner. So if you are offered a job at the other end of the country you can simply move, after giving notice. Secondly, house prices aren’t exactly booming in many parts of the UK, so you aren’t missing out by not buying right now. Thirdly, renting may be pricey but at least you don’t have to consider all the other costs of homebuying, like Stamp Duty, mortgage fees, legal fees and the survey on your new home, which can add up to thousands.”

If you need any help and advice on the implications of Property Ownership, Letting and Taxation, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail:

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