It’s cheaper to rent a property than to buy a home for the first time in six years, says Hamptons.
Before the March 2020 pandemic, people with a 10% down payment would have had £ 102 a month better to buy property than rent, the estate agency said.
But falling rents mean people are now spending a lot less on living in cities.
There are now only four areas in the UK where it is cheaper to buy a house than to rent.
These are the North East, the North West, Yorkshire and the Humber and Scotland.
At the start of 2020 it was cheaper to buy instead of renting in every country or region in the UK. However, the average cost of renting has jumped.
In May, the average cost of a newly rented rental home was 7.1% higher than a year earlier – the fastest growth rate Hamptons has seen since starting recording data in 2013.
This contrasts with last May, when demand plummeted due to work and leisure restrictions, as well as young adults returning to live with their families during the pandemic.
Is it cheaper to rent than to buy?
Greater London – £ 251 cheaper
South East – £ 54 cheaper
South West – £ 108 cheaper
East – £ 117 cheaper
East Midlands – £ 98 cheaper
West Midlands, £ 35 cheaper
Yorkshire and the Humber – £ 5 more
North West – £ 4 more
North East – £ 72 more
Wales – £ 11 cheaper
Scotland – £ 130 more
Aneisha Beveridge, head of research at the Hamptons, says the pandemic is responsible for reversing that six-year trend.
“A year ago, lenders either raised their rates or pulled out mortgages that were higher in value altogether,” she said.
“For first-time buyers in particular, it drove up the cost of paying a mortgage, if they could get one, well above the cost of renting.”
Ms Beveridge added that the balance was likely to revert to buying somewhat, especially as mortgage rates fall, but that would likely be partially offset by rising house prices.
“And while interest rates fall, they are still considerably higher than they were before the pandemic on higher LTV (loan-to-value) loans,” she said.
“Despite this, we expect the rent-to-buy gap to close by the end of the year, returning to longer-term levels in 2022.”