The gap between monthly rental costs and mortgage payments is at its smallest in a decade, but renters are still paying almost 20% more of their income on housing costs in parts of the country. Nationwide, rents are now just 3% more expensive than mortgage repayments, which save homeowners £227 a year, according to a report by Halifax. This compares to December 2018, when renting was 10%, or £893 a year, more expensive than owning a home. The narrowing of the gap is being driven by first-time buyers requiring smaller deposits, combined with house price.

Renters are paying up to 18% more each month than those who own their own homes in some parts of the UK. The gap is greatest in London, where homeowners save 18% on average (£3,727 annually), followed by the South East (17%), South West and Scotland (both 16%). Buyers across all UK regions save upwards of 10% when compared to renters in the same area, with the exception of Yorkshire and The Humber, where homeowners save just 3% on average – £235 per year.

The research looks at the housing costs associated with a mortgage on a three-bed home, compared to the average monthly rent of the same property type.

Russell Galley, Managing Director, Halifax, said “The overall gap between home buying and renting is at its smallest margin for 10 years, but this masks some significant regional variations where homeowners are making some considerable savings on monthly costs.”

“While Londoners stand to save the most from home ownership compared to renting, buyers in the South East and South West of England and north of the border in Scotland are also reaping the benefits. Buyers in two thirds of UK regions are saving upwards of £1,000 a year from living in a home they own, with the smallest saving for homeowners in Yorkshire and Humberside at £227.”

At a UK level, homeowners are saving 3% on average (£227 annually) with the gap reducing from 17% year-on-year since 2015 when buyers were saving an average of £1476 per year or £123 per month.

This has reversed from 2009 when it was buying that was more expensive, and renters saved on average £209 per year or £17 per month.

Over the last 10 years, with house prices increasing, average monthly buying costs have also increased by 26% (£150), driven by an increase in the average mortgage payment and a rise in the amount of the average deposit. The cost of renting has increased by 33% (£186) over the past 10 years to £747.

Table 1: Average monthly buying and renting costs by region, December 2019

Average monthly buying costs Average monthly rental costs % difference £ difference £ Annual Savings
Greater London £1,378 £1,689 -18% -£311 -£3,727
South East £1,008 £1,214 -17% -£206 -£2,475
South West £765 £915 -16% -£150 -£1,796
East Anglia £736 £853 -14% -£117 -£1,400
Scotland £545 £647 -16% -£102 -£1,224
Wales £536 £634 -15% -£98 -£1,177
North West £568 £665 -15% -£98 -£1,174
West Midlands £621 £711 -13% -£90 -£1,076
East Midlands £620 £686 -10% -£65 -£784
North £468 £530 -12% -£62 -£747
Northern Ireland £437 £489 -11% -£52 -£621
Yorkshire & the Humber £544 £564 -3% -£20 -£235
UK £728 £747 -3% -£19 -£227

Table 2: UK average monthly buying costs and rental payments

Average monthly buying costs Average monthly rental payment % difference £ difference £ Annual Savings
Dec-09 £578 £561 3% £17 £206
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 £685 £759 -10% -£74 -£893
Dec-19 £728 £747 -3% -£19 -£227