What's the latest?

Renting a home is now cheaper than buying one in more than half (54%) of British cities, according to the latest data from Zoopla.

The average monthly rental payment on a two-bedroom home across Britain's 50 cities rings in at £690 – that's £47 cheaper than the average mortgage repayment of £737.

(Mortgage repayments are based on loans of 90% of the average value of a two-bedroom home in the city payable at an interest rate of 4.5%.)

The research found that Londoners fare best when it comes to renting, paying 47% less (£1,861) than the average mortgage payment (£3,001) in the capital. 

Why is this happening?

The proportion of locations where it's now cheaper to rent a home than to buy one has increased by 14% since October 2016 which is the last time Zoopla ran the numbers. Then, it was more cost-effective to rent in just 40% of British cities.

However Zoopla spokesperson, Lawrence Hall issued a note of caution on the findings. He said: "It's important to remember that, while renters may be better off in the short-to-medium term in some areas of the country, buying a property is a long-term investment. 

"And, with most buyers opting for mortgage terms of 25 years, buyers are likely to be better off overall compared to those who choose to rent."  

 

image: https://st.zoocdn.com/zoopla_static_cms_content_cms_document_assets_(458464).jpeg

 

Above: A two-bedroom home up for rent in Cambridge for the average monthly cost of £1,099

Who does it affect? 

Londoners save the most in the rent-versus-mortgage scenario, forking out nearly 50% less than the average mortgage repayment each month.

Renting also financially trumps buying in Cambridge (saving 30%), Brighton (27%), Reading (26%), Bedford (24%), Liverpool (23%), Southampton (20%), Bristol (16%), Oldham and Bournemouth (both 14%).

However, the better value of renting demonstrated here is most comparable to first-time buyers, as many existing homeowners will have more than 10% equity in their property and will be paying mortgage rates of less than 4.5%. 

Sounds interesting. What's the background?

The situation was reversed in other parts of the country, where buying a home was found to be cheaper than renting. It was most stark in Glasgow where servicing a mortgage is 31% (£174) cheaper than paying monthly rent.

Next was Dundee where it costs 29% less (£549) each month to service a mortgage rather than rent.

On the flipside, Yorkshire is an ideal county to buy a home in. Bradford, Barnsley and Leeds, all cities within the county, rank within the top 10 locations where buying is cheaper than renting.

Top 3 takeaways

  •  Across British cities, renters pay an average £47 less each month than buyers
  •  Renting is most cheap versus buying in London, Cambridge and Brighton
  •  Buying is most cheap versus renting in Glasgow, Dundee and Coventry

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Top 10 locations where renting beats buying:

Rank

City

Average monthly rent

Average asking price of 2-bed home

Average mortgage repayment (based on 90% loan)

Buying premium

1

LONDON

£1,861

£599,950

£3,001

-47%

2

CAMBRIDGE

£1,099

£297,498

£1,488

-30%

3

BRIGHTON

£1,199

£315,000

£1,576

-27%

4

READING

£1,000

£260,000

£1,301

-26%

5

BEDFORD

£764

£195,000

£975

-24%

6

LIVERPOOL

£623

£156,750

£784

-23%

7

SOUTHAMPTON

£779

£189,750

£949

-20%

8

BRISTOL

£900

£210,995

£1,056

-16%

9

OLDHAM

£476

£109,950

£550

-14%

10

BOURNEMOUTH

£848

£194,975

£975

-14%

Source, Zoopla April 2017

Top 10 locations where buying beats renting:

Rank

Location

Average monthly rent

Average asking price of 2-bed home

Average mortgage repayment (based on 90% loan)

Rental Premium

1

GLASGOW

£649

£95,000

£475

31%

2

DUNDEE

£549

£82,000

£410

29%

3

COVENTRY

£775

£125,000

£625

21%

4

BRADFORD

£493

£79,998

£400

21%

5

BARNSLEY

£450

£75,000

£375

18%

6

LEEDS

£736

£125,000

£625

16%

7

MIDDLESBROUGH

£497

£84,950

£425

16%

8

BOLTON

£493

£85,000

£425

15%

9

BIRMINGHAM

£749

£130,000

£650

14%

10

WALSALL

£523

£91,000

£455

14%

Source, Zoopla April 2017