The five British towns where renting a one-bedroom flat costs less than buying
R enting is cheaper than buying for first-time buyers in only six towns in the UK, according to a cost of living study.
The data, from research undertaken by insurer More Than, underlines the struggle faced by young Britons with many unable to find the average £33,000 deposit, according to Halifax, needed to secure their first home, and with rising house prices making the task harder.
Rents, meanwhile, continue to rise for tenants while those who have bought property are able to access ever cheaper credit, with mortgage rates steadily falling over the past five years, to further reduce their monthly repayments.
The Cost of Running a Home Report analysed 72 towns, comparing the cost of rent and mortgage payments plus household outgoings such as council tax, utility bills and insurance.
It found that in just five towns, it was cheaper to rent a one-bedroom flat than it was to own it: Cambridge, Norwich, Croydon, Richmond and Westminster.
S ource: More Than
For a two-bedroom flat, the story is similar. According to the report, tenants are can only expect to pay less than owners in six towns – Cambridge, Cromer, Croydon, Richmond, Westminster and St Austell.
S ource: More Than
The research suggested tenants could make more significant savings in larger properties. As shown in the chart below, tenants could save £374.45 renting a four bedroom property in Enfield, north London, and £919.44 in Cambridge. Tenants renting big houses in Westminster could save thousands.
S ource: More Than
Half of salary spent on homes
On average, tenants living in three-bedroom properties are paying slightly less than owners of the same-sized homes.
Owners can expect to spend just under £20,000 a year (or £1,634 per month) on bills and their mortgage living in a three bedroom house. Tenants in the same sized property would pay £19,000 a year, or £1,576 per month for household outgoings and rent.
However, this is the national average. On a town by town basis, the report suggested that renting was still more expensive in more than half of the districts.
T wo working adults renting a three-bedroom home and earning an average salary of £27,600 could expect to spend 43pc of their income on bills and rent alone. Two owners would spend 44pc of their annual wage on the mortgage and household bills.
This percentage of salary being spent on accommodation is far above what housing and homeless charity, Shelter deems affordable – it suggests tenants aim to spend 30pc of their gross income running the home.
Where rents are less than bills
In some towns, the bills cost more than rent and mortgage repayments.
This was found to be the case in Carlisle, Blackpool and Neath Port Talbot where tenants were spending more on utilities than rent. In Richmond, Scarborough, Paisley, Perth, Burnley, Penrith, Sunderland, Middlesbrough, Glossop and Lowestoft, bills were over 90pc of their accomodation costs.
Homeowners in Burnley, Neath Port Talbot and Paisley saw their total bills cost twice their mortgage payment.
T he lowest bills in the country were found in Telford, in the West Midlands. Household outgoings in a three-bedroom property cost £485 for renters and £495 for homeowners.
The highest bills were found in three bedroom houses in Harrow. Those renting a three bed home in the north west London district could expect to fork out £780 – owners could pay £745.
There were only two towns where you could live and rent for under £650 per month although this still amounts to 35pc of the average annual salary.
A one bed flat in Omagh, Northern Ireland for £580.59 per month is feasible according to the research. The same sized flat could be found in nearby Antrim for £617.19 per month.
No choice for renters
According to the Office for National Statistics, rental prices have been on the rise across the UK since 2011 increasing by 2.6pc in the last 12 months.
T he number of people renting is also going up. The English Housing Survey estimated between 2013 and 2014 there were nine million tenants. The latest figures from 2014 to 2015 show that there are now 11 million.
And it’s showing no sign of slowing. The rental rate in London is expected to increase 24.4pc by 2025. By this time 60pc of residents will be tenants.
Shelter has voiced concern about out of control housing costs and the lack of choice in the private rental sector.
It has warned more tenants face moving back home until well into their thirties which could prove detrimental to their career. All the while deposits and house prices spiral out of their reach.
It says the only other option for tenants is to pay out dead money in expensive and unstable rentals which will not help them find a secure home of their own.
Campbell Robb, chief executive of Shelter, said: “Sky high housing costs are leaving millions of people stuck in the rent trap, forking out huge chunks of their income on rent and with no hope of saving for a home of their own.
“Worryingly, current schemes like Starter Homes will only benefit higher earners, and risk making things even worse. With the Housing Bill in its final stages this week, it’s essential that the Government sees sense and realises that committing to building homes that people on ordinary incomes can actually afford is the only way to fix our housing crisis.”