To buy or not to buy?

New research from the Council of Mortgage Lenders (CML) published this week has looked at the comparative costs of owning and renting a property in the UK with a view to addressing whether prospective owners would be better to “buy, or not to buy?”

CML Analytics Manager James Tatch claims to have looked at the issue “all angles” using detailed new data from the Valuations Office Agency and the CML's own Regulated Mortgage Survey.

According to the CML, there are two crucial factors that make a big difference to people perceive the relative costs. If you ignore the need for a hefty deposit, buying is cheaper than renting a similar property across all borrowing types, and across all regions of the UK.

However, when you take into account the fact that a typical housing deposit might be as high as 25%, the borrowing costs relate to only 75% of the property's value, whereas a tenant will be paying rent covering 100% of the property.

Under this scenario, buying becomes more expensive than renting for two thirds of first-time buyers, but buying is still cheaper than renting for around four-fifths of first-time buyers on an interest-only basis, said Mr Tatch.

In total, average mortgage monthly payments are £176 per month more expensive than renting a comparable property in the UK. Yet monthly rents are £176 per month - exactly the same amount - more expensive than average interest-only payments.

"When you look at the monthly costs of buying and renting, it seems to be six of one and half a dozen of the other. Deciding to buy a home is as much an emotional decision as a financial one. Most people aspire to home-ownership and value the security and control it can confer,” said CML Director General Paul Smee.

“But others will say that the flexibility of the rented sector should not be under-estimated either. In the end, deciding whether and when to buy is a personal decision. It should be reassuring to people to see that, on a monthly basis, the tenures appear to be broadly neutral in terms of the costs they impose."

If you’re unsure about whether your finances, and quality of life, would be better served as a home owner or one of the thousands of renters in the UK, contact our housing experts today. We’ll ensure that you see both sides of the fence before making your next property decision.