Cheaper now to buy a home than to rent

This may come as a surprise to many aspiring first-time buyers that recent findings from the English Housing Survey highlight that home-ownership is continually popular even with the turbulent mortgage markets and house price fluctuations. This could be a result of improved accessibility to becoming a homeowner such as the continuation and improvement of share ownership property and the support from mortgage lenders within the affordable housing sector.

However this recent study also displayed high levels of satisfaction amongst individuals in all types of tenure, it simply segregated the owner-occupier group at the top end of this. With the market still very much demanding routes to home ownership it is not just shared ownership that is offering alternative routes to get onto the property ladder. Affordable homes are becoming more widespread and housing associations and developers alike are working towards providing more affordable homes. The government support continues in the form of grants to the developers and council for affordable housing and new homes and also have the NewBuy and HomeBuy schemes to benefit buyers.

These schemes alongside other ownership types are ensuring that issues such as the cost of paying a deposit (which was seen as one of the main barriers to home ownership according to the survey) are addresses and solutions are there for many situations. The statistics demonstrated that only 25% of  people surveyed who had considered applying for a mortgage in the previous 12 months actually went ahead with the application. The remaining 75% did not proceed with the application as they felt the deposit wasn’t sufficient enough to obtain the mortgage they required.

Is it really cheaper to buy than to rent?

If a potential buyer can overcome the issue of raising a sufficient deposit then owner-occupiers actually have lower housing costs in real terms that private tenants. Looking into the statistics in more detail owner-occupiers made average mortgage repayments of £143 per week, in comparison to average rental payments of £160 per week by tenants in the private sector. Social tenants on the other hand make a rental payment on average of £79 a week.

Taking into account also the higher average earnings of owner-occupiers the statistics show a significantly lower percentage of income goes towards housing costs. For the year 2010-11 figures highlighted that the average gross annual household income for owner-occupiers was just under £41,000 in comparison to the private rented sector at £29,000 and social housing tenants at £17,400. This provided the basis to conclude that owner occupiers paid on average 19% of income on housing costs, compared to 43% for people renting privately and 29% for those in the social sector.

Perhaps surprisingly comparatively the figures for earnings for those who have outright ownership of properties was Just over £30,000 compared to the average annual income of just over £50,000 for those buying with a mortgage. The most likely explanation of this however was of those who owned a property outright there was a high percentage who were retired and living off a pension.