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Buying now cheaper than renting across 90% of Britain

26th September 2011

Falling house prices and increasing rental demand has made it cheaper to buy a property than to rent one in 45 of the 50 largest towns across Britain. The cost of renting is now 13% higher on average than the cost of owning, according to the latest research from property website Zoopla.co.uk.

Zoopla.co.uk, which lists over half a million properties for sale or to rent in Britain, analysed the asking prices and rents for all two-bedroom flats currently on the market, comparing the rental cost to the cost of ownership based on servicing an interest-only mortgage at 5% p.a.

Milton Keynes topped the list of locations where buying beats renting with current rents more than 39% higher than the cost of owning, leaving renters on average £2,544 per year worse off. At the other end of the scale, renting remains more cost-effective in Aberdeen, where it costs 9% more to own compared to rent, leaving owners on average £936 worse off.

In London, where the average asking price for 2-bedroom flats currently stands at £430,608, buying still beats renting by a significant margin. The average monthly rent in the capital today is 28% higher than the cost of ownership, leaving renters paying an extra £5,964 annually compared to owners.

Nicholas Leeming, of Zoopla.co.uk, commented: “With house prices down, low interest rates and sky high demand in the private rental sector, buying has never been a better option for those able to secure a mortgage. And with owners reducing prices further in order to achieve a sale before Christmas, there may well not have been a better time to buy in recent times.”

Full list of the top Zoopla.co.uk 50 rent/buy locations

Top 5 locations where renting rules over buying

Rank

Location Avg. Asking Price* Avg. Monthly Rent* Rental Discount**
1 Aberdeen £ 212,941 £809 -8.8%
2 Swansea £167,234 £669 -4.0%
3 Cambridge £246,551 £992 -3.0%
4 Plymouth £155,353 £626 -3.3%
5 Oldham £125,012 £507 -2.6%

Source: Zoopla.co.uk

* based on 2 bedroom flats in August 2011

** % variance between average monthly rent and average monthly cost of 5% p.a. interest-only mortgage

Top 5 locations where buying beats renting

Rank

Location Avg. Asking Price* Avg. Monthly Rent* Rental Premium**
1 Milton Keynes £131,630 £760 39%
2 Birmingham £131,118 £731 34%
3 Northampton £105,996 £586 33%
4 Warrington £104,996 £577 32%
5 York £161,769 £871 29%

Source: Zoopla.co.uk

* based on 2 bedroom flats on the market in August 2011

** % variance between average monthly rent and average monthly cost of 5% p.a. interest-only mortgage

- Ends -

For further information, please contact Tim Vooght at pr@zoopla.co.uk or on 020 3872 5615.

Notes to editors

Zoopla is the UK's most comprehensive property website, focused on empowering users with the resources they need to make better-informed property decisions. We help consumers both find their next home and research the market by combining hundreds of thousands of property listings with market data, local information and community tools.

At Zoopla we are fans of transparency and everything we do is aimed at making the market more efficient for both property consumers and advertisers alike. Zoopla has rapidly become the UK’s leading online destination for property consumers to search for homes and do their market research and the favoured online marketing partner for UK estate agents, letting agents and property developers.

Launched in 2008, Zoopla has since been one of the fastest growing websites in the UK, now attracting over 40 million visits per month and we are proud to have collected numerous awards and accolades along the way, including being named one of the Top 10 UK Tech Companies (Guardian) and one of the Top 10 Most Innovative UK Companies (Smarta).

Zoopla is part of Zoopla Limited which was founded in 2007.

Zoopla Limited, The Cooperage, 5 Copper Row, London, SE1 2LH
Registered in England and Wales with Company No. 09005884
VAT Registration number: 191 2231 33
Data Protection number: Z9972266

Methodology

  • Mortgage payments are calculated assuming a conservative mortgage rate of 5% p.a. to provide an effective comparison to renting.
  • We use an interest-only mortgage rate in the comparison as the interest on a mortgage is the effective cost of financing living in that home.
  • We assume a 100% LTV ratio to do a fair and simple comparison of the cost of financing versus the cost of rent.

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