The newly released Zoopla.co.uk Rent v. Buy Index compares current asking prices to the average rents for two bedroom flats in the top 50 locations around the country. Zoopla found that average monthly mortgage repayments were 8% lower on average than the cost of renting (assuming interest-only mortgage at 5% interest p.a.).
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 which complete the top five rental hotspots, according to Zoopla.co.uk
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% and rents to remain the same, renting would become more cost-effective in 80% of the locations studied.
Nicholas Leeming, commercial director of Zoopla.co.uk, said: “Conventional wisdom is that buying is better than renting in the property market holds true for most places around the country. However, there are places where renting is the better option which may be driven by an excess of buy-to-let flats or a shortage of properties for sale.”