Renting in London is now cheaper than monthly mortgage payments with a 10% deposit.

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tons cheaper rent in London than owning a home for the first time in four years after tenants fled the capital in the midst of a global pandemic.

New research shows that Londoners who rent their homes earn £ 251 more income after their monthly rent than homeowners who pay mortgage payments.

This is the exact opposite of a trend seen last spring before Covid-19 swept the country, according to an analysis by real estate agency Hamptons.

Based on the monthly purchase price versus rent, with a 10 percent deposit and a 90 percent mortgage loan, home ownership was £ 123 cheaper than renting in March 2020, just ahead of nationwide isolation and real estate. closing the market.

During the first quarantine and while waiting for new apartments, young people renting apartments returned to the family home, while foreign students and international leaders were left on the sidelines. This made the homeowners suggest discount rent to fill their empty pads.

The last time it was cheaper to rent than to own was in June 2017, after the London housing market peaked and the Brexit vote, when the rental market softened.

“The fall in rents in the capital has made renting cheaper than buying anywhere else. And as rents continue to fall, the gap looks set to continue to grow, ”says Aneisha Beveridge, head of research at Hamptons.

Table: monthly purchase price (with a 10% deposit) relative to the lease

Region

Price difference in March 2020

Price difference in May 2021

London

– 123 pounds sterling

£ 251

Southeast

– £ 75

£ 54

Southwest

– £ 29

£ 108

East

– 56 pounds sterling

£ 117

East Midlands

– 31 pounds sterling

£ 98

western middle earth

– £ 95

£ 35

Yorkshire and the Humber

– 137 pounds sterling

– £ 5

northwest

– 123 pounds sterling

– £ 4

Wales

– 122 pounds sterling

£ 11

Scotland

– £ 204

– 130 pounds sterling

Great Britain

– 102 pounds sterling

£ 71

A negative value means that it is cheaper to buy than to rent, a positive value means that it is cheaper to rent than to buy.

Source: Hamptons, June 2021.

Limiting the availability of mortgages over the past 12 months has resulted in an increase in the cost of ownership. Major lenders struggled to cope with the sudden high buying demand when the real estate market reopened last May and ditched the high cost credit products that usually helped first time buyers climb the stairs. As lending weakens, Beveridge expects the lease-to-owning value gap to gradually narrow.

The biggest difference between the two is central Londondata show that rents fell 20.3% during the pandemic. This is a result of the lack of wealthy international students, as well as the flooding of the rental housing market. Airbnb Owners… With no tourism trade, they turned their city holes from from short to long term rentals.

3-room houses in Walthamstow: left£ 725k, i.e. a mortgage of £ 3204 per month (with a 10% deposit) versus a rent of £ 1995 per month. right

/ Churchill | Stow brothers

Although the difference in cost between rent and purchase is greatest in London due to the high share of tenants and rented properties, this trend can be seen in seven of the 11 regions that make up the UK. The only places where owning property is cheaper than renting is the Northeast, Northwest and Yorkshire and the Humber.

On the national average, it is now £ 71 cheaper to rent an apartment than owning a home per month.

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