For a lot of people, spending £700+ per month on a property to rent is simply throwing money down the drain. To buy a house and pay a mortgage means that you will own something, a tangible investment that offers emotional and financial security.
A survey from Rightmove has found that 58% of renters are essentially trapped into renting because they cannot afford to buy a house. The rest of the renters are either happy renting (13%) or want to buy someday but not now (28%). The government’s Help to Buy scheme has prompted nearly a quarter of renters surveyed to enter the buyers market and 18% of young adults living at home have been encouraged to buy thanks to the scheme.
The amount of renters entering the buying market is expected to increase by 6% but even with government schemes like Help to Buy, a deposit requires commitment, finances, and time and with rising housing prices it could mean that first-time buyers will still struggle with climbing onto the housing ladder.
Research from Halifax suggests that as a buyer you could be 10% better off per month than those who are renting. They concluded that the average cost of a 3-bedroom house would cost £673 per month in a mortgage payment but average rent cost is around £745.
The demand for rental properties is pushing up the cost of rental properties and though housing prices are dramatically rising, they are still cheaper than they were 5 years ago and mortgage rates have declined.
However, buying is not always more affordable. While in Aberdeen the average house price is 206,000 but the average rental price is 1,275 and Zoopla suggest that a buyer could be more than 99k better than a renter in 7 years. On the other hand, an average London renter could be £82,412 than a buyer.
Most buyers are going to be better off than those who are renting. Buyers are committing to a long-term investment than can pay off and fair better compared to those who rent. Of course not ever situation is the same nor is every market. Some locations are better to find property: Dundee, Aberdeen, and Glasgow while in others the renters are better off like London, Bedford and Bournemouth.