In 2017 buyers were, on average, £900 better off a year than renters but new figures reveal homebuyers are now only making annual savings of £366 compared to those renting their property.
In fact, the figures from Halifax reveal, the gap between the cost of buying and renting is down 59%, its lowest in nine years.
It is thought this was because first-time buyers were paying lower deposits when purchasing a home, but were doing so in an environment where house prices were rising, which meant mortgages were getting more expensive.
Indeed, Halifax’s figures revealed the housing costs, including mortgage, on a three-bed home in the UK were £729 per month in December 2018. However, renters were paying £759 per month for the same type of property.
There were regional differences in the costs of buying and renting too. Outside of London, Scottish buyers experienced the biggest gap, with buyers making annual savings of 20% or £1,574 more than renters.
At the other end of the scale, Yorkshire housebuyers were paying only 5%, or £361, less than renters.
Russell Galley, managing direct of Halifax, said: “The gap between buying and renting is narrowing, primarily driven by reduced first-time buyer prices deposits in some regions and continuing house price growth, meaning buyers are paying more on their mortgages.
“With more products available for borrowers, these factors combined have pushed up the price of buying quicker than the price of renting.
“Meanwhile, the cost of rent, household maintenance and average deposits have remained broadly flat.”
Halifax’s said first-time buyers were now driving the number of houses purchases where mortgages were being used. It said, overall, the cost of buying a house was still lower than renting in all areas and homeowners remained better off than renters in all parts of the UK when costs were considered.
