Just before the pandemic, someone buying a home with a 10% deposit would have been £102 a month better off than someone who was renting property. The latest study, as of May 2021, finds that it was 7%, or £71, cheaper for a first-time buyer with a 10% deposit to rent property than to buy.
On average, the rent would be £1,054 a month while mortgage repayments would be £1,125.
There are many opportunities in the rental market
The only areas of England where it would have been cheaper to buy were the North East, the North West and Yorkshire & Humber. In all other areas of England, it would have been cheaper to rent than buy.
This is something that interests us, and hopefully, it will see more people looking to let property. This will be good news for landlords. If you are a landlord in or around Great Dunmow, or you want guidance on how to become one, please get in touch, and we’ll be happy to help.
Not even new schemes are of great help for some buyers
The introduction of the 95% mortgage guarantee scheme doesn’t change much, and tenants will still be better off. Someone buying property with a 5% deposit will spend 19%, or £195, more a month when buying compared to renting.
Holly Andrews, Managing Director at KIS Finance, says: “Strong house price growth over the last 12 months, coupled with increased interest rates for higher loan-to-value mortgages has pushed up average monthly mortgage payments to more than the cost of renting for the first time in years. Many finance experts recommend that people get themselves onto the property ladder as soon as possible, however, in the current market, renters may be better to hold off and wait until house prices and interest rates settle back down.”
Holly Andrews also said; “Although interest rates are falling, they are still higher than they were pre-pandemic, especially for higher LTV mortgages. So, for those who have smaller deposits (10% or less), it’s likely that they will now be better off to stay in rented accommodation and try to save a bigger deposit (15% - 20%) rather than rushing to get onto the property ladder.”
Holly concluded by saying; “As the temporary Stamp Duty relief comes to an end this month and as more and more sales finalise and demand for housing decreases, we are expecting prices to settle and interest rates to fall. Therefore, this gap between renting and buying should start to decrease over the next few months and we are expecting it to switch back in favour of buying in the not-too-distant future. If prospective buyers can stay in their rentals and use the time to save up larger deposits then they will be far better off in the long run.”
For all rental market enquiries in Great Dunmow, please feel free to call us on 01371 874005 or why not email us at firstname.lastname@example.org. With considerable experience in the local housing market, and free valuation services, we look forward to helping you make an informed decision when you move in or around Great Dunmow.