First-time buyers are now saving more than £800 a year as the gap between buying and renting has stretched by 8% in the past 12 months, according to new data from Halifax.

The Halifax Buying vs Renting Review is based on the housing costs* associated with a mortgage on a three-bed home, compared to the average monthly rent of the same property type.

Monthly rental costs have increased by 10% to £821 in the past year, while monthly buying costs have increased by 1% to £753 during the same period. The difference was only 1% in 2019, which dropped sharply from the previous year, when the monthly difference between buying versus renting was 10%.

Over the past decade, average monthly buying costs have increased by almost a third (31%), while the cost of renting has gone up by 36% during that time. The starkest contrast was when the gap reached 17% in 2015 – £123 per month – and tightest in 2019. This was primarily driven by increased average mortgage payments and the rise in the deposit amount.

Whilst the average first-time buyer deposit amount has gone up £11,677 since before the start of the pandemic (March 2020) to £58,986, and the average mortgage payment has increased, low interest rates have meant the mortgage payment is up less than rental payments.

Andrew Asaam, Mortgages Director, Halifax, said “Lockdown restrictions may have held back renters planning to buy a property during the past year with its practical challenges, and while the stamp duty holiday race has helped drive record levels of mortgage approvals, the cost of renting has crept up in the same period.”

“Although the biggest savings to be made – of around £5,000 a year – are unsurprisingly in the capital, homeowners in the South East, East Anglia and Scotland are also making the biggest savings a year, around £2,000 on average compared to their neighbours who are renting.”

“Raising a deposit is still the biggest challenge for those looking to get on to the property ladder, but the average first home deposit has gone up by another £11,000 since the start of the pandemic.”

“We know that first-time buyers will benefit from steps that make finding a deposit more of a reality and the new Help to Buy Mortgage Guarantee scheme could be a gamechanger for those saving hard to take the first step and often paying rent at the same time. We have also committed to lending £10bn in 2021 to help people buy their first home this year.”

Buyers in London are on average £4,606 a year better off than those renting. In the South East buyers are £2,578 a year better off, followed by East Anglia (£2,019) and Scotland (£1,848). The slimmest gap between buying and renting is in Northern Ireland, where buyers are £539 a year better off, followed by East Midlands, where homeowners are saving on average £897 and Yorkshire and the Humber, where buyers are ending up with around £961 a year compared to those who are renting.

Table 1: UK average monthly buying costs and rental payments
  Average monthly buying costs Average monthly rental payment % difference £ difference £ Annual Savings
Dec-10 £576 £605 -5% -£29 -£354
Dec-11 £573 £653 -12% -£80 -£960
Dec-12 £588 £661 -11% -£73 -£877
Dec-13 £582 £692 -16% -£110 -£1,321
Dec-14 £614 £720 -15% -£106 -£1,278
Dec-15 £621 £744 -17% -£123 -£1,476
Dec-16 £646 £759 -15% -£113 -£1,359
Dec-17 £640 £754 -15% -£115 -£1,376
Dec-18 £681 £759 -10% -£78 -£938
Dec-19 £743 £747 -1% -£4 -£48
Dec-20 £753 £821 -8% -£69 -£824

Table 2: First-time buyer average house price, mortgage advance and deposit, 2020, 2021

2020

 

2021

 

Average House Price (£s) Average Mortgage (£s) Average Deposit (£s) Average Deposit (% of Price) Average House Price (£s) Average Mortgage (£s) Average Deposit (£s) Average Deposit (% of Price)
North             138,406             113,823               24,582 18%             149,183             118,865               30,318 20%
Yorkshire & Humberside             158,945             130,837               28,108 18%             168,724             134,383               34,341 20%
North West             166,242             136,575               29,668 18%             178,907             143,443               35,465 20%
East Midlands             185,226             151,969               33,258 18%             202,803             161,985               40,818 20%
West Midlands             187,932             153,892               34,041 18%             205,995             163,493               42,503 21%
East Anglia             225,437             181,403               44,034 20%             244,209             191,226               52,984 22%
Wales             157,493             130,687               26,805 17%             169,111             135,192               33,919 20%
South West             223,634             180,757               42,876 19%             243,244             189,886               53,358 22%
South East             299,365             244,674               54,691 18%             324,446             256,765               67,681 21%
Greater London             462,617             351,296             111,321 24%             488,381             355,695             132,685 27%
Northern Ireland             142,049             115,972               26,076 18%             147,303             117,152               30,150 20%
Scotland             154,509             123,582               30,927 20%             155,193             119,107               36,085 23%
UK             237,628             190,319               47,309 20%             257,934             198,948               58,986 23%