Renting a property in the UK now cheaper than owning a home: Mortgage expert reacts

According to recent research by Capital Economics, renting a property in the United Kingdom is now more affordable than getting a new mortgage to purchase one for the first time in 14 years[1].

While average monthly mortgage payments have risen to above £1,000 for the first time ever[2], experts anticipate that when market activity cools later in 2023, this rise in mortgage costs will lead to a decline in house prices. As such, Uswitch.com mortgage expert Kellie Steed has shared why owning is still preferable to renting even in the present market as well as advice for getting your foot on the property ladder in 2023.

Kellie Steed, Uswitch.com mortgage expert says:

“Although renting is usually less expensive than a mortgage in the short term, owning a property has several advantages to renting. You have an asset that can be passed on when you die, you can rent out your home or spare room and you have greater freedom to own pets, change fittings or remodel.

“Arguably most importantly, however, is that as you continue to pay down the mortgage, you build equity, enabling you to sell the house for a profit or obtain another loan or mortgage. Furthermore, your monthly expenses will steadily decrease until you have paid off your mortgage and can live in your house for free.

“There are some disadvantages to owning a house as well, such as your equity can decrease if the housing market crashes, leaving you with less than what you paid for the house.

“When compared to renting, there are more up-front costs needed to apply for a mortgage and complete the home-buying process. Also, there is greater responsibility for home upkeep and repairs, which may result in higher costs if you need to make adjustments.

“Nevertheless, in general, buying a house is a more cost-effective and sensible choice than renting in the long term, although it may also depend on your financial situation”.

On tips for first-time buyers in 2023, Kellie says:

“With the cost of living crisis impacting discretionary income, and mortgage rates significantly higher than they have been in recent years, this is undoubtedly a difficult period for first-time buyers.

“For some would-be homeowners, though, receiving assistance through one of the government housing schemes offered may be the best way to start.

“While the Help to Buy programme ceased accepting new applications from applicants in England in October 2022, it is still available to those in Wales until March 2025. There are also alternative programmes like the First Homes Scheme, Shared Ownership, and the Deposit Unlock Scheme that could be viable solutions to get some first-time homebuyers onto the property ladder.

“It’s crucial to speak with a mortgage broker before making a definitive choice, since the ideal scheme for you will depend on your unique circumstances”.