Is it cheaper to rent or buy a home?

For some people, having the choice between renting or buying is a huge decision. Depending on your finances, you may not have access to one of these options, but if you do, there are a lot of things to consider. There are obvious long-term benefits associated with owning property, but your short-term finances may leave you having to weigh up the decision. Therefore, the question of whether it is cheaper to rent or buy a home is an critical issue to consider.

It is easy to see why many people assume renting a property is more affordable than buying a home. When you rent a house, you don’t need to pay the sizable deposit lenders require when providing a mortgage for the home. You don’t need to enlist the services of a solicitor to negotiate on your behalf or to collect the keys for you. Also, when you rent property, you don’t have to worry about repair work, or the costs of maintenance, as your landlord takes care of these aspects.

Many factors include the decision whether to rent or buy

However, there is an argument that many buyers are in a position where, after arranging a mortgage, they may find it cheaper to own their home than rent. This depends on a range of factors, so it isn’t possible to say this is universally correct, but many people will find that buying property saves the money compared to renting. Again, the long-term benefit of obtaining something for your money is worth considering, but taking this away, there is an opportunity to see buying a home as the more suitable option.

A study undertaken by Zoopla returned several local authority areas where it is more affordable to buy property than to rent a property. The research suggests paying a mortgage in Hartlepool was 47.4% cheaper than the equivalent cost of renting a property. Every month, this allowed a property owner to save £213 a month compared to what they would pay in rent. Yes, there are other fees to consider when owning a home, but saving more than £200 each month is likely to be of interest to many people.

Some areas are more suitable for buyers

Other local authorities in England where it was more affordable to buy than rent include Burnley and Middlesbrough. Lawrence Hall from Zoopla, stated; “'In some areas, renters are paying a premium when you compare their outgoings to that of homeowners servicing a mortgage. Of course, buying isn't always a viable option for those who aren't able to put down a deposit or want the flexibility renting can offer. Those looking for comparatively cost-effective places to rent should keep an eye on the country's top location such as St Albans, where renting is almost a quarter cheaper than servicing a mortgage.”

It is vital individuals consider their own needs and budget. There is also a need to work out what you want to achieve in the short and long-term. Whatever you want to achieve in the property market, speak to Koopers and we will be more than happy to assist you.