19 Mar The Rent/Buy Gap is at its Lowest in a Decade
We like to keep people up to date with the latest news from around the property industry. While property in our area is reasonably stable and the local market is robust; occasionally we see an impact from events in the city and in Parliament – yes we are referring to Brexit, what else. Before you roll your eyes and click elsewhere we promise this isn’t a Brexit blog and we’ll move on.
Research conducted by one of the UKs leading lenders, found that the gap between the cost of buying and renting is now at its lowest for almost a decade. In the past it has been significantly cheaper to own your property – with average savings of £900 a year compared to renters. The latest figures show that these savings are now down to around £370 a year, the lowest figure in nine years.
Why is the gap smaller?
The gap has been decreasing gradually since the financial crisis of 2008 and is largely down to reduced first-time buyer deposits in some regions. Continuing house price growth and interest rates has meant that people are actually paying more on their monthly mortgage payments.
There are now so many mortgage products that more borrowers are making the step to buy. This means that the price of buying has been pushed up slightly faster than the price of renting which inevitable closes that gap. Rental prices, deposits and household maintenance have also remained fairly flat and with the new Tenant Fee Ban coming into place in the Summer we’re likely to see the cost of renting drop.
So have the tables turned?
The short answer is, no! It will continue to be cheaper to own your property than it is to rent for some time yet. Of course the rental market is impacted by property values and the sales market. If property prices suddenly shoot up due to demand or new development, you are likely to see rental prices increase.
It does mean that, with so much financial uncertainty around, now could be a good time to get on to the property ladder as a first time buyer. There are a number of government schemes and stamp duty exemption policies which can help you to make that first step.
Renting vs Owning
This is an age old conversation. Owning a property with a mortgage is a long term investment. Usually a large proportion of your mortgage payment is interest and the loan will often take decades to pay off. Renting sometimes suits people better. Renting a property gives you a certain amount of flexibility.
If you find yourself wanting to move to a particular area, it is often more affordable to rent in the short term, or indeed if that area stretches your budget too much you can move at reasonably short notice.
It’s really down to individual circumstances. Many of the properties we let in the area are taken up because of the flexibility a 6-12 month term contract offers, with some people wanting to ‘try before they buy’ in the area.
Get in Touch
We market dozens of properties to let in Wentworth Estate and the surrounding area every year, and so if you are thinking of moving to the area or simply browsing our properties to let in Virginia Water, make sure you get in touch with us on the details below.
If you would like to speak to someone about your property options, make sure you speak with a member of our expert staff. You can call us on 01344 843000 or email us. You can also follow us on Facebook, Twitter, Instagram and LinkedIn.
photo credit: Nobuhiro Asada