New research reveals you could be £352,500 better off buying a home than renting

...even if house prices don't rise!

Buying vs renting is a debate many people will start to have in their twenties. Should you scrimp and save to be able to afford a home of your own as soon as possible? Or would you be just as well-off continuing to put aside just enough for your rent?

Related: Saving for a deposit just got easier as Zoopla reveals renting has become more affordable

According to new research if you choose to buy your own home you could be £3,727 better off a year than renting. The research carried out by Halifax revealed that renting a home is more expensive in every region of the UK than buying a property.

Buying vs renting

house with brick wall and and black door

(Image credit: Future PLC/ Colin Poole)

On average, tenants were found to be paying up to £311 more a month than a first-time buyer on their mortgage. While a tenant is paying out £747 on average, a first-time buyer is only handing over £728.

London had the most significant difference between what renters and first time buyers were shelling out on rent and mortgages. While house prices in London might be steep, pushing to buy a property early in the capital could save you £311 a month.

The South East came in second place for the biggest homeowner savings, compared to their renting counterparts. Renters were found to be paying £2,475 more than homeowners a year.

Halifax based their stats on the combined housing costs including a mortgage on a three-bed home in December 2019, compared to the average rent of a similar property.

room with white colour and potted leaves

(Image credit: Future PLC/ Oliver Gordon)

In 2009, tenants were better off than homeowners, saving £209 a year. However, in the last decade rent has rocketed by £186 as demand for rental properties has grown. In contrast, homeowner's costs have only increased by £150.

'The overall gap between home buying and renting is at its smallest margin for 10 years,' says Russell Galley, managing director at Halifax. 'But this masks some significant regional variations where homeowners are making some considerable savings on monthly costs.'

'Londoners stand to save the most from home ownership compared to renting. While buying in the South East and South West of England and north of the border in Scotland are also reaping the benefits,' he adds. 'Buyers in two thirds of UK regions are saving upwards of £1,000 a year from living in a home they own.'

What will you save in the long-term?

According to research by the Intermediary Mortgage Lenders Association, you could be £352,500 better off buying a home than renting over 30 years.

The research calculated that monthly mortgage repayments on the average house price of £230,000 home would be £133,700 cheaper than paying rent over 30 years in the same property.

room with yellow cupboard window table and chair

(Image credit: Future PLC/ David Merewether)

That is not to mention that at the end of the period, homeowners would also have £218,800 in equity from paying off their initial 95 per cent loan-to-value mortgage of that amount.

However, the research didn't factor in house price rises, nor did it factor in a fall in property values. It based its claim on interest rates on home loans remaining at the low-level that they are now.

Researchers found that if interest rates stayed at these levels a homeowner could pay £317,900, while private tenants might pay out £451,600 in rent over the next three decades.

dining room with white wall and flower pot on table

(Image credit: Ti-Media)

Rent was worked out as starting at the national average of £11,292 a year as worked out by Homelet, and rising by 2 per cent each year.

The report claimed that even if mortgage rates did rise, they'd have to be higher than 11.5 per cent throughout the life of a loan before buying and renting had the same financial returns.

The current historically low mortgage rates sit around 2.45 per cent for a two-year fix. This means that monthly mortgage repayments are low in comparison to rents that have continued to rise over the same period.

living room with white wall and grey sofa

(Image credit: Future PLC/ Colin Poole)

'The long-term benefits of being a homeowner are not just confined to the property value and the potential for house prices to increase,' Kate Davies from The Intermediary Mortgage Lenders Association told the Mailonline.

'Homeowners also potentially save hundreds of thousands of pounds compared to their private renter counterparts,' she adds.

Related: Rents in THESE Northern cities are rising faster than the rest of the UK

If you needed an incentive to start saving for a deposit there it is – a strong case for buying in the buying vs renting debate.

You might need to sacrifice your Starbucks and Pret lunches for a few years. But think how many more chicken caesar baguettes  you'll be able to afford when you finally get on the property ladder.

Rebecca Knight
Deputy Editor, Digital

Rebecca Knight has been the Deputy Editor on the Ideal Home Website since 2022. She graduated with a Masters degree in magazine journalism from City, University of London in 2018, before starting her journalism career as a staff writer on women's weekly magazines. She fell into the world of homes and interiors after joining the Ideal Home website team in 2019 as a Digital Writer. In 2020 she moved into position of Homes News Editor working across Homes & Gardens, LivingEtc, Real Homes, Gardeningetc and Ideal Home covering everything from the latest viral cleaning hack to the next big interior trend.