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Data Suggests More First-Time Buyers Better-Off Renting

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    Could Buyers Turn to Renting for a Better Deal in 2024?

    Halifax’s fresh market analysis shows that first-time buyers now pay £1,231 monthly to own a home, just £27 less than renting a similar property.

    According to the data, this gap between owning and renting is the smallest since 2019.

    While this may not be the best news for people looking to get on the property ladder for the first time, it could mean that buy-to-let property investors may see tenant demand – and thus rental prices – rise further.

    Find Out More: So, what is a buy-to-let property investment anyway? It’s always a good idea to improve your knowledge of property investment before rushing into any decisions. Check out our guides on buying more than one property and buy-to-let tax implications for more essential property insights.

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      What Does the UK Market Look Like for First-Time Buyers?

      The analysis, comparing mortgage costs for a three-bed home with average monthly rents for the same type of property, reveals a 24% increase in rental costs in 2023 to £1,258, while homeownership expenses grew by 27% to £1,231.

      Nationwide, first-time buyers save £319 annually compared to renters.

      However, owning a first home was more expensive than renting in nine out of 12 UK regions or nations last year.

      Renters save the most compared to first-time buyers in East England, where they pocket an average of £2,325 extra each year.

      Renting in the South East (£1,859), East Midlands (£1,741), and Yorkshire & the Humber (£1,731) also offers significant yearly savings compared to owning a first home.

      Only the South West, London, and Scotland see owning a first home as cheaper than renting. The South West leads, with owners being £1,663 better off annually.

      Mortgages director at Halifax, Kim Kinnaird, said: “Our latest analysis shows that, in nearly all regions across the UK, first-time buyers are better off renting than owning a similar home. In fact, the only regions where it’s cheaper to own rather than rent are the South West, London and Scotland.

      “We know home ownership can offer long-term financial and living stability, and that’s why we believe it’s an important step to take. Our customers want to create a secure future, so it’s a big priority for us to help people get there.

      “However, elevated borrowing costs, alongside a lack of available homes to buy, is pushing ownership further out of reach for would-be first-time buyers in many parts of the country. This is why we’re major participants and big supporters of the Government’s affordable home ownership schemes, such as shared ownership and the mortgage guarantee scheme, and we’re committed to helping first-time buyers fulfil their dreams of having a place to call their own.”

      Discover More: Learn more about property investment with our guides on the best thing to invest in right now in the UK and buying a rental property.

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      What Could This Mean for Buy-to-Let Investment?

      A more enticing rental market tempting people away from home ownership could be good news for buy-to-let landlords, especially those who invest in areas that offer good job opportunities and attractive rents – such as Liverpool or Manchester.

      As tenant demand rises, rental prices experience a corresponding upward trend. Increased demand puts pressure on available rental properties, leading landlords to capitalise on the competitive market by raising rents.

      This heightened demand often stems from factors such as population growth, urbanisation, and economic opportunities, drawing individuals to specific areas.

      Consequently, landlords are empowered to command higher prices, reflecting the basic principles of supply and demand in the rental housing market.

      For example, in 2023, the UK saw unprecedented tenant demand due to high inflation and interest rates, forcing more people to look for homes in the rental market. According to the Guardian, this led to a significant 9% rental growth from February 2023 to February 2024. Why not learn about how to avoid stamp duty on a second home with the RWinvest guide.

      For more information on specific areas, check out some of our buy-to-let area guides, including:

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      Dale Barham

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      Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.