Rising mortgage rates over the past couple of years means that the cost of renting a home is now cheaper than owning one in nearly all UK regions.
This could come as a surprise if you’re a tenant, as many landlords have increased their rents recently in response to steeper mortgage rates. As a result, the gap between the cost of home ownership and renting is now at its narrowest since 2019, according to Halifax.
The bank’s analysis, based on the housing costs associated with a mortgage on a three-bed home compared to the average monthly rent of the same property type, found that in the UK as a whole, monthly rental costs in 2023 grew by an average of 24% to £1,258, while home-owning costs grew by 27% to £1,231, a difference of just £27 a month, or £319 over a year.
This is in sharp contrast to the six years from 2013, when the gap between owning and renting exceeded £1,000, peaking at £1,567 in 2016. However, it then plummeted to £238 in 2019.
The gap has been fairly volatile since then, rising to £923 in 2020, £1,300 in 2021, and then falling to £498 in 2022 and £319 in 2023.
A full breakdown is provided in the table below:
| Year | Homeowner’s avg. monthly cost* | Renter’s avg. monthly cost | Monthly saving for homeowners | Annual saving for homeowners | |||||
| 2012 | £614 | £661 | £48 | £572 | |||||
| 2013 | £581 | £692 | £111 | £1,327 | |||||
| 2014 | £607 | £720 | £113 | £1,361 | |||||
| 2015 | £616 | £744 | £128 | £1,539 | |||||
| 2016 | £629 | £759 | £131 | £1,567 | |||||
| 2017 | £629 | £754 | £125 | £1,501 | |||||
| 2018 | £669 | £759 | £90 | £1,084 | |||||
| 2019 | £727 | £747 | £20 | £238 | |||||
| 2020 | £744 | £821 | £77 | £923 | |||||
| 2021 | £766 | £874 | £108 | £1,300 | |||||
| 2022 | £971 | £1,013 | £42 | £498 | |||||
| 2023 | £1,231 | £1,258 | £27 | £319 |
Source: Halifax, Birmingham Midshires and ONS *Mortgage prices based on Halifax 12mth rolling data calculated to December 2023
However, the monthly cost of owning a first home compared to the equivalent rental cost was higher in nine out 12 UK regions or nations last year.
For example, the monthly cost of renting a property in Yorkshire and the Humber in 2023 stood at £809, compared to £954 for the average monthly home-owning cost, making it 18% cheaper to rent rather than own a home in this region.
Similarly, the average monthly cost of home ownership in the East of England was £1,546 in 2023, compared to £1,353 for renting, a difference of £2,325 over the year. The only three UK regions where the monthly cost of home ownership was cheaper than renting in 2023 were Great London, the South West and Scotland.
According to Halifax’s research, in the South West owning a property typically pays £1,298 a month compared to £1,437 to rent – a 10% difference.
Kim Kinnaird, Mortgages Director at Halifax said: “Our latest analysis shows that, in nearly all regions across the UK, first-time buyers are better off renting than owning a similar home. In fact, the only regions where it’s cheaper to own rather than rent, are the South West, London and Scotland.
“We know home ownership can offer long term financial and living stability and that’s why we believe it’s an important step to take. However, elevated borrowing costs, alongside a lack of available homes to buy, is pushing ownership further out of reach for would-be first-time buyers in many parts of the country.”
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
Should I buy a property if I’m currently renting?
That’s a decision only you can make. While there are certainly benefits that come with ownership, you don’t necessarily need to push yourself to buy a home if you’re comfortable renting.
For example, the benefits of renting include having greater flexibility over where you live, and the freedom to move around without having to sell up (you will need to give your landlord notice, however). You are also usually not responsible for the costs of repairs and maintenance in your property when renting. You can read more about the pros and cons of renting versus buying in our article Renting or buying – which is right for you? and about whether now is a good time to buy in our guide Should I buy a property now or wait?
Some people only rent because they cannot save up enough to put down a deposit on a home – a frustrating situation to be in when Halifax’s data shows that the average renter can make the same repayments as the average homeowner. If you are in this position, you could consider seeking mortgage advice to see what options are available to you.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
Can I remortgage to save money?
If you’re a homeowner and coming to the end of a fixed rate or other mortgage deal, or you’re already on a standard variable rate, then now could be a good time to think about remortgaging if you want to keep your outgoings down.
Mortgage rates have risen substantially over the past year, following a series of increases in the Bank of England base rate. So, if you spot an attractive mortgage deal, now could be a good time to grab it. Read more in our article Five good reasons to remortgage right now.
The remortgage process typically takes around six to eight weeks, but can take longer for non-standard cases, so it’s well worth getting started sooner rather than later if your mortgage deal is due to finish soon.
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