Owning a home is almost £1,400 a year cheaper than renting, according to new research.
Data from Halifax shows that the gap in cost between buying and renting a home widened in 2021, with renting now carrying a 20% premium in some parts of the UK.
Here, Which? analyses the current landscape for homebuyers and renters, and offers advice on getting on to the property ladder in 2022.
The annual Halifax Buying vs Renting Review analyses the difference in cost between owning and renting a three-bedroom home.
This year's analysis found that monthly rental costs grew by 6% in 2021 to reach £874, while the costs of home ownership grew by just 2% in the same period, to hit £759.
This means that on average, renters are paying £115 more every month (£1,378 a year) than homeowners, the biggest gap recorded since 2017.
The graph below shows how the monthly costs of owning and renting have changed since 2010.
Scotland and the North West of England have the biggest gaps between owning and renting, with renters paying an average of 22% more. The smallest gap is in Northern Ireland, where homeowners are just 3% better off.
Unsurprisingly, renters pay the biggest overall premium in London, where average rents of £1,703 dwarf ownership costs of £1,355.
The table below shows the difference in cost between owning and renting across the UK.
|Region||Monthly cost of owning||Monthly cost of renting||Difference (£)||Difference (%)|
Halifax says 2021's figures show the biggest gap between owning and renting since 2017 - but there's no guarantee this trend will continue in 2022.
Last year's data was strongly influenced by falling mortgage rates. The cost of mortgages dropped across the board in 2021 to reach historic lows in the Autumn, as lenders made the most of a recovering economy and a of just 0.1%.
Halifax says the falling cost of borrowing came at a time when rents continued to rise, resulting in a bigger gap than usual.
2022's figures could read differently. Since December, the base rate has increased three times, and now stands at 0.75%. Mortgage rates for have risen significantly during this time, but 90% and 95% loans have remained relatively unaffected.
Renting a home is becoming more expensive due to a growing gap between supply and demand.
This lack of supply has seen some tenants priced out. Research by the estate agency body Propertymark found that 70% of its member agents saw a rise in the number of renters offering above the asking rent to secure properties in the last six months.
If you're thinking of getting on to the property ladder in 2022, there's both good news and bad news.
Despite mortgage availability improving, difficulties saving a deposit at a time when house prices are rising is likely to remain the biggest barrier to homeownership in 2022.
Halifax's data shows that first-time buyers put an average of £62,000 down as a deposit when they buy a home, but don't fret - a 5% deposit on an average-priced UK home would be in the region of £12,500.
If you are thinking of buying, it's worth looking into the different ways you might be able to get a boost on to the property ladder.