A third of homes for sale are cheaper to buy than rent, with the average first-time buyer saving £93 a month on a mortgage instead of renting.

Our latest research shows that a third of homes (150,000) currently for sale can be bought with a mortgage and monthly repayments that are lower than the average rent in the same area. This shift is significant as it indicates a growing advantage for buyers over renters.

Currently, the average monthly rent in the UK is £93 more expensive than the average mortgage repayment for a first-time buyer. This is a marked improvement from last summer when mortgage rates were 1% higher, making renting more economical than buying. The reduction in mortgage rates has tipped the scale in favour of buying, allowing more people to consider purchasing a home rather than continuing to rent.

With these changes, first-time buyers are now in a better position to save money on housing costs, potentially freeing up funds for other investments or savings. This trend highlights the importance of staying informed about market conditions and mortgage rates, as they can significantly impact the cost-effectiveness of buying versus renting a home.

Key takeaways

• A third of homes for sale are cheaper to buy than rent, with the average first-time buyer saving £93 a month on a mortgage instead of renting.
• Our latest research shows that a third of homes (150,000) currently for sale can be bought with a mortgage and monthly repayments that cost less than the average rent in the same area. This significant finding highlights a shift in the market, making buying more affordable than renting for many.
• The average monthly UK rent is currently £93 more expensive than the average mortgage repayment for a first-time buyer. This is an improvement since last summer when mortgage rates were 1% higher, making renting the more economical option. The drop in mortgage rates has turned the tables, giving buyers a financial edge.
• According to Zoopla, 34% of homes listed for sale can be bought with mortgage repayments lower than the average rent in the same area. Buying an average home with a 20% deposit on a 30-year term results in monthly savings of £93 compared to renting. 
• The North East, Scotland, and North West offer the best availability, with over 40% of homes having mortgage repayments below rental costs. The Oadby and Wigston area near Leicester has the highest proportion of homes for sale that are cheaper to buy than rent.
• In cities like Manchester, Newcastle, Southampton, and Sheffield, the majority of homes for sale can be purchased with mortgage payments lower than rents, providing significant opportunities for first-time buyers to save on housing costs.

First time buyers should look to urban areas for affordable homes

Some regions have more affordable homes for first-time buyers, but urban areas are the best locations to find homes cheaper to rent.

Oadby and Wigston, a suburb of Leicester, has the highest proportion of homes for sale (82%) with mortgage repayments lower than local rent. Ipswich in Suffolk comes second (80%), and North West Leicestershire is third (78%).

In cities like Manchester (62%), Newcastle (68%), Southampton (62%), and Sheffield (51%), the majority of homes for sale are also cheaper to buy than rent. This is due to the abundance of flats, the most common property type in these cities.

This is good news for renters who prefer to buy locally.

Over 40% of homes in the north and Scotland are cheaper to buy than rent 

First-time buyers can find 150,000 homes (34% of the total listed) where average monthly mortgage repayments are lower than rents, assuming a 20% deposit.

The North West, North East, and Scotland have the highest proportion of these homes.

Over two-fifths of homes for sale in the North East (48%), Scotland (46%), and North West (44%) are cheaper to buy than rent, with the monthly difference between renting and buying in these areas ranging between £240 and £425.

However, the availability of affordable homes is at risk of falling in these regions as house price inflation has recovered earlier than in the southern regions of England.

In the south of England and the Midlands, the share of homes cheaper to buy than rent is lower. Just a quarter (27%) of homes in the South West and a third (33%) of homes in the East Midlands have mortgage repayments lower than local rents, due to higher home prices in these regions.

Two in five homes listed for sale in London are cheaper per month than renting

London has a relatively high proportion of homes where mortgage repayments are lower than rents. Two in every five homes listed on Zoopla are cheaper to buy than rent. This trend provides a significant opportunity for first-time buyers looking to enter the housing market in the capital. While London is often seen as an expensive city to live in, this data suggests that purchasing a home can be a more affordable option than renting for many.

This affordability is largely due to the significant gap between rental inflation and house price inflation in London over recent years. Rents have surged by 26.6%, while house prices have only increased by 8.9% in the past five years. This disparity means that even though house prices are high, the cost of renting has become disproportionately higher, making mortgage repayments more attractive in comparison.

First-time buyers in London, therefore, have more options available to them. However, it is important to note that while mortgage repayments may be lower than rental costs, the initial barrier of saving for a deposit remains a challenge for many. Despite this, the potential long-term savings on monthly outgoings can make the effort worthwhile. Furthermore, property ownership provides the added benefit of building equity over time.

Flats dominate the market when it comes to properties that are cheaper to buy than rent. Nine out of ten homes in London that fit this category are flats, which typically come with a lower price tag compared to houses. This trend is particularly evident in inner London, where typical first-time buyer monthly mortgage payments are £470 lower than rents. In outer London, the difference, though smaller, still stands at £170.

This trend is not exclusive to London. Potential homeowners across the UK looking to secure a mortgage with payments below local rents should also consider flats. Currently, two in three flats available in various markets are priced in a way that makes mortgage repayments lower than rent. This suggests a broader opportunity for first-time buyers to find affordable homes and make the transition from renting to owning.

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