Zoopla compared current asking prices with the average rents for two bedroom flats in the top 50 locations around the country to discover if renting or buying was the best choice.
We’ve just released our Rent vs Buy Index which reveals the top places across Britain where renting a property beats buying and vice versa in current climate. This was done by comparing current asking prices to the average rents for two bedroom flats in the top 50 locations around the country.
What may come as a surprise to many is that buying a home beats renting in 74 per cent of cases around Britain with average monthly mortgage repayments being 8 per cent lower, on average, than the cost of renting (assuming interest-only mortgage at 5 per cent interest p.a.). Perhaps the biggest surprise is that it is still cheaper to buy than rent in London, despite high prices.
Topping the list of places where renting is a better option than buying currently is Huddersfield, where the average two-bed flat costs only £493 per month to rent versus £146,898 to buy. Renting is also cheaper than buying in a number of other places including Oldham, Brighton, Swansea and Edinburgh.
At the other end of the scale, Dundee comes in top of the list of places where buying is currently the best option with average asking prices for two-bed flats at only £88,263 versus £530 per month in rent. Other locations around Britain where buying is by far the better choice at current asking prices include Birmingham, Derby, Cambridge and Milton Keynes.
Even in London, which has the highest rents in the country, buying is still the more cost-effective option, with average rents on two-bed flats currently at £2,155 per month versus average asking prices at an eye-watering £446,345.
While buying wins out over renting today, the impact of a rise in interest rates cannot be ignored. If interest rates were to increase by 1 per cent and rents to remain the same, renting would become more cost-effective in 80 per cent of the locations studied.
Zoopla.co.uk Top 50 Rent vs Buy Index July 2010
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Zoopla.co.uk Rent vs Buy Index – Key and Methodology
The Rent/Buy Ratio indicates the degree to which renting is less/more expensive than buying in each location. A figure above 1.0 indicates it is cheaper to rent than buy and the greater the figure the more expensive buying is versus renting. Similarly a figure below 1.0 indicates it is cheaper to buy than rent and the lower the figure the more expensive it is to rent versus buy.
Current active property listings on Zoopla.co.uk have been used to compare the relative costs of buying versus renting two bedroom flats in the largest 50 cities/towns across Britain. The cost of buying is based on repayment costs of an interest-only mortgage at 5 per cent interest per annum.
Some information contained herein may have changed since it was first published. Zoopla strongly advises you to seek current legal and/or financial advice from a qualified professional.