Renting cheaper than buying over a ten year period

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Renting v Buying:

Renting can typically work out as an option that is cheaper than
buying over a 10 year-period, that’s according to research carried out by rentBunk.com and reported by Mortgage Introducer.

When all other costs are taken into account, such as upfront
and monthly payments, the Bristol based lettings platform says:

“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,� says Mortgage Introducer.

The conclusion is that renting works out £172,513 cheaper on
average across the UK over 10 years, but the big difference of course is that
there’s no long-term benefit of the terminal bricks and mortar investment
secured buy buyers.

Renters benefit from a cheaper deal over the short term, if
you can call 10 years short term, and they have the freedom of the landlord
being responsible for everything, all repairs and emergency problems with the
property, plus renters have the flexibility of mobility, if job opportunities
arise elsewhere. Renters also have the opportunity to invest the savings into other
types of investment which, who knows, my even out-perform property long-term.

Co-founder of rentBunk.com, Tom Woolard says:

“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.�

This saving, says Woolard, is greatest in Cambridge, the difference
being £341,090 over 10-years, with the comparable figure for London at
£316,247.

Bournemouth, comes in at £183,376 cheaper, Bristol
(£177,613), Edinburgh (£166,547), Cardiff (£143,984), Southampton (£138,617),
Portsmouth (£137,240) and Plymouth (£128,480).

Glasgow is the lowest city at a saving of renting over
buying in 10-years at £43,145.

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