Home Property Is it better to rent or buy? 
Property

Is it better to rent or buy? 

by LLP Reporter
12th Jun 19 1:54 pm

Leading lettings platform, Bunk, has looked at the comparative cost when it comes to remaining in the rental market or taking that step on the ladder, and how this differs across the UK.

Bunk looked at the cost of a rental deposit and the cost of renting for a decade. Bunk then compared this cost to the financial barrier of a mortgage deposit, and the cost of monthly mortgage payments over a 10-year fixed term at a rate of 2.58%.

Across the UK the average monthly rent is £676. With the newly introduced five-week cap, that means a rental deposit costs an average of £845 and renting at this average monthly rate over a 10-year period would cost a total £81,120, a total cost of £81,965 when including the deposit.

The current average UK house price is £226,798 and so a 10% deposit would set you back £22,680. This leaves a loan amount of £204,118 and at a 10-year fixed rate of 2.58% would mean a total repayment of £231,798, a total of £254,478 including the deposit.

This means, that renting is £172,513 cheaper than owning a home over a 10-year period when it comes to the upfront and monthly costs, with the one big difference being the bricks and mortar investment secured at the end.

This saving is most notable in Cambridge with a difference of £341,090 over 10-years between renting and buying, with the saving in London also topping £316,247.

In Bournemouth, renting over 10-years is £183,376 cheaper than buying, with Bristol (£177,613), Edinburgh (£166,547), Cardiff (£143,984), Southampton (£138,617), Portsmouth (£137,240) and Plymouth (£128,480) all home to some of the biggest savings.

The lowest saving is in Glasgow where renting for 10-years is just £43,145 cheaper than buying in the city.

Co-founder of Bunk, Tom Woolard said, “Of course the big difference between renting and buying is that one leaves you with a sizable financial asset as a reward for your years of hard work making mortgage payments.

“However, more and more of us are opting to rent long-term and what we wanted to highlight is that while the rental market is generally viewed in a negative light due to high rental costs, it is actually a considerably cheaper option when compared to homeownership, even with almost record low-interest rates.

“Not only this but those that feel resigned to renting due to the high financial barrier of buying actually have a much better opportunity to save compared to those paying a mortgage. Whether they choose to use this for a deposit further down the road or simply to enjoy a better quality of life is up to them.”

Renting vs Buying Costs Over 10-Years

Location

Total Rental Cost Over 10-Years

Total Mortgage Cost Over 10-Years

Difference

Cambridge

£148,410

£489,500

£341,090

London

£203,579

£519,826

£316,247

Oxford

£169,993

£465,619

£295,627

Bournemouth

£104,518

£287,894

£183,376

Bristol

£130,223

£307,836

£177,613

Edinburgh

£129,495

£296,042

£166,547

Cardiff

£88,876

£232,860

£143,984

Southampton

£95,545

£234,162

£138,617

Portsmouth

£95,060

£232,300

£137,240

Plymouth

£70,083

£198,572

£128,490

Birmingham

£86,088

£209,605

£123,518

Leeds

£92,393

£207,037

£114,644

Leicester

£70,931

£185,427

£114,496

Sheffield

£74,326

£181,182

£106,856

Manchester

£99,910

£199,768

£99,858

Liverpool

£60,504

£147,298

£86,795

Newcastle

£86,451

£172,170

£85,719

Nottingham

£81,238

£160,786

£79,549

Aberdeen

£87,664

£166,328

£78,665

Glasgow

£102,456

£145,602

£43,145

UK

£81,965

£254,478

£172,513

10-Year Rental Cost Data

Location

Average Rent (per month)

Rental deposit*

10 Year Rental Cost**

Total Cost + Deposit

Cambridge

£1,224

£1,530

£146,880

£148,410

London

£1,679

£2,099

£201,480

£203,579

Oxford

£1,402

£1,753

£168,240

£169,993

Bournemouth

£862

£1,078

£103,440

£104,518

Bristol

£1,074

£1,343

£128,880

£130,223

Edinburgh

£1,068

£1,335

£128,160

£129,495

Cardiff

£733

£916

£87,960

£88,876

Southampton

£788

£985

£94,560

£95,545

Portsmouth

£784

£980

£94,080

£95,060

Plymouth

£578

£723

£69,360

£70,083

Birmingham

£710

£888

£85,200

£86,088

Leeds

£762

£953

£91,440

£92,393

Leicester

£585

£731

£70,200

£70,931

Sheffield

£613

£766

£73,560

£74,326

Manchester

£824

£1,030

£98,880

£99,910

Liverpool

£499

£624

£59,880

£60,504

Newcastle

£713

£891

£85,560

£86,451

Nottingham

£670

£838

£80,400

£81,238

Aberdeen

£723

£904

£86,760

£87,664

Glasgow

£845

£1,056

£101,400

£102,456

UK

£676

£845

£81,120

£81,965

*Monthly rent divided by four to find the weekly rate and then multiplied by the five-week cap.

**Average monthly rent multiplied by 12 to find a year and then by 10

***Deposit plus total rental payment costs

10-Year Mortgage Cost Data

Location

Average House Price

Deposit (10%)

Loan Amount

Monthly Repayment*

Total Repayment**

Total Cost***

Cambridge

£436,255

£43,626

£392,630

£3,716

£445,874

£489,500

London

£463,283

£46,328

£416,955

£3,946

£473,497

£519,826

Oxford

£414,972

£41,497

£373,475

£3,534

£424,122

£465,619

Bournemouth

£256,579

£25,658

£230,921

£2,185

£262,236

£287,894

Bristol

£274,351

£27,435

£246,916

£2,337

£280,400

£307,836

Edinburgh

£263,868

£26,387

£237,481

£2,247

£269,656

£296,042

Cardiff

£207,531

£20,753

£186,778

£1,768

£212,107

£232,860

Southampton

£208,692

£20,869

£187,823

£1,777

£213,293

£234,162

Portsmouth

£207,033

£20,703

£186,329

£1,763

£211,597

£232,300

Plymouth

£176,973

£17,697

£159,276

£1,507

£180,875

£198,572

Birmingham

£186,806

£18,681

£168,125

£1,591

£190,925

£209,605

Leeds

£184,517

£18,452

£166,065

£1,572

£188,585

£207,037

Leicester

£165,258

£16,526

£148,733

£1,408

£168,901

£185,427

Sheffield

£161,475

£16,147

£145,327

£1,375

£165,035

£181,182

Manchester

£178,039

£17,804

£160,235

£1,516

£181,964

£199,768

Liverpool

£131,276

£13,128

£118,149

£1,118

£134,171

£147,298

Newcastle

£153,442

£15,344

£138,098

£1,307

£156,826

£172,170

Nottingham

£143,297

£14,330

£128,967

£1,220

£146,456

£160,786

Aberdeen

£148,236

£14,824

£133,412

£1,263

£151,505

£166,328

Glasgow

£129,764

£12,976

£116,787

£1,105

£132,625

£145,602

UK

£226,798

£22,680

£204,118

£1,932

£231,798

£254,478

*A 10-year fixed loan payment at 2.58%, with 12 payments per year = 120 payments

**Total cost of loan including interest

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