According to the data, the average cost including mortgage payments of buying a three-bed home in the UK was £679 a month in December 2017, compared to the average monthly rent of £754 for the same property type.
The gap between the cost of buying and renting is now at its highest in four years, up 44% from last year’s £623 saving to £900 a year.
Londoners are seeing the greatest annual savings at £2,191 compared to £589 in Yorkshire & the Humber.
However, as a percentage, the biggest savings are made in Scotland and the South West of England, where the cost of buying is 17% lower than renting. The financial gain is most humble in the South East of England, where the cost of buying is 8% lower than renting.
The average monthly cost of buying has dropped 22% (£192) since 2008, while rental payments have jumped by the same amount (22% or £138).
Russell Galley, managing director at Halifax, said: “The gap between buying and renting has widened significantly, primarily driven by a reduction in mortgage rates and a more competitive market pushing down monthly payments. Meanwhile, the cost of rent, household maintenance and average deposits have remained broadly flat.
Despite having to put down a sizeable deposit up front, homeowners are overall better off than renters in all parts of the UK. But those who are unable to get onto the property ladder because they can’t raise enough cash are paying more by renting.
The good news is that record numbers of first-time buyers are still taking their first step on to the ladder and helping to bridge this gap thanks to a continued low-rate environment and government schemes including Help to Buy.”
The trend continues North of the border
According to research from Bank of Scotland, first-time buyers in Scotland could save even more as the buying to renting gap widens further to £31,000 on average.
The data reveals that the average monthly costs associated with buying a three-bedroom house stood at £5032 in December 2017 - £103 lower than what it typically costs to rent the same sized property (£6063). This can save first-time buyers £1,240 per year.
There is now a 17% gap between buying and renting, which is the largest (alongside South West England) when compared to the UK average of 10%.
The monthly cost of purchasing a home for first-time buyers has now been cheaper than renting for the ninth year in a row. During this time, the costs associated with buying a property decreased by £253 per month. Meanwhile, the average monthly rent increased by £33.
Buying is more affordable than renting across the whole of the UK
Graham Blair, mortgage director at Bank of Scotland, said: “Considering the financial benefits of home-ownership and a sustained period of low interest rates, it’s no surprise that buying a property continues to be cheaper than renting, particularly in Scotland, where first-time buyers now make up half of the housing market.
Although these monthly costs don’t include all the up-front fees associated with buying a home, the low average monthly cost of buying, when compared to renting, will no doubt help those looking to take their first step on the property ladder.”
