One of the biggest incentives for buying a home rather than renting is mortgage repayments are often lower than rent.
While this isn’t always the case, a new study has helpfully highlighted those areas of the England and Wales where buying is significantly cheaper than being a tenant.
Analysis by property and conveyancing solicitors Jones Whyte has found Portsmouth is the city offering the best value when it comes to buying versus renting.
It examined the latest government data on house price, rent and household income to discover the typical mortgage cost in Portsmouth is 12.99% lower than rent.
Indeed, the average house price in Portsmouth, said Jones Whyte, was £251,343 – this amounts to a monthly mortgage payment of £1,128, which is £168 less than the average rent of £1,296
But Portsmouth is one of a number of local authorities in the UK where costs of buying a home are lower than renting
For each area Jones Whyte calculated the monthly cost of buying a home using a representative mortgage with a 4% interest rate, a 25-year repayment period and a 15% deposit based on the average house price in each location. It then drew up a list of the top ten.
Following hot on the heels of Portsmouth for the second most affordable local authority when it comes to buying versus renting, was Burnley where it was 12.96% cheaper to repay a mortgage. Monthly mortgage costs stood at £507 and average rent was £75 per month more expensive at £582.
Then followed Manchester in third place. Here a mortgage was £1,124 and rent was £142 more expensive on average at £1,266, a difference of 11.18%.
Michael McLean, partner and solicitor advocate at Jones Whyte, said: “Historically, renting tended to be cheaper than buying.
“However, this is becoming less true as time goes on, which prompted us to look at just how much cheaper renting was than buying a house, and if there were any areas where it was cheaper to buy than rent.
“We found 14 local authorities where a representative mortgage cost less than average rents, including major cities such as Manchester, and even a borough of London in Tower Hamlets.
“This might signify how desirable moving to these areas may be, and that rents may have risen more quickly in these areas in response to this when compared to housing costs.”
The 10 UK areas where it is best to buy by the relative price of a mortgage compared with rent (source: Jones Whyte)
| Rank | Local authority | Average house price | Monthly mortgage repayment | Average monthly rent cost | How much cheaper it is to buy than to rent (%) | How much cheaper it is to buy than to rent (£) |
| 1 | Portsmouth | £251,343 | £1,128 | £1,296 | 12.99% | £168 |
| 2 | Burnley | £112,910 | £507 | £582 | 12.96% | £75 |
| 3 | Manchester | £250,623 | £1,124 | £1,266 | 11.18% | £142 |
| 4 | Bristol | £354,210 | £1,589 | £1,741 | 8.72% | £152 |
| 5 | Newcastle upon Tyne | £207,373 | £930 | £1,005 | 7.42% | £75 |
| 6 | Southampton | £242,286 | £1,087 | £1,172 | 7.25% | £85 |
| 7 | Tower Hamlets | £481,699 | £2,161 | £2,294 | 5.79% | £133 |
| 8 | Nottingham | £201,001 | £902 | £937 | 3.76% | £35 |
| 9 | Southwark | £494,757 | £2,220 | £2,298 | 3.40% | £78 |
| 10 | Lincoln | £185,225 | £831 | £854 | 2.69% | £23 |
