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Will the price divide between renting and owning a property lessen?

October 18th 2013
By: Melanie Hollidge
Will the price divide between renting and owning a property lessen?

If you own a home with an interest only mortgage you could currently save up to £1,098 per year or £91.50 week compared to renting, according to the latest research by Zoopla.
 
The figures have been based on the average cost of renting a two bedroom flat in the UK, which works out at £8,258 per year.  This is £1,098 more than having a 5% interest only mortgage on a similar size property, and works out at £7,160 per year.
 
However this might soon change, as more would-be buyers could raise enough money to buy a home under the new Help to Buy scheme.  This could drive down monthly rents by as much as 5%, as landlords will face stiffer competition to find good quality tenants, potentially resulting in rental prices falling. 
 
If property prices continue to increase at their current rate, the cost of renting could become cheaper than having to service a mortgage. This has already happened in our Capital where house prices have pulled away from the rest of the country and are rising at a quicker pace than rental costs.
 
Looking at the historical data, before the global financial crisis, renting was 29% cheaper than buying a home.  However, since then, the rental market has become more expensive.  Increased monthly rents have been due to a lack of mortgage funding available to buyers.

According to the CML, mortgage approvals had already jumped by a third up until August this year, with new applications to the housing market accounting for 44% of all house loans during the month.
 
However with house prices looking to increase over the next few years, it would seem that there has never been a better time to invest in property whether it’s your first house, or moving up or renting it out.
 
If you need any further information about property for sale in the Surrey area, then why not pop into your local branch of Goodfellows for a chat and a coffee.

The house featured is a 3 Bedroom House for Sale, in Wimbledon to find out more informaton on this property please click on the link.