The monthly cost of renting is approximately ten per cent cheaper than the average monthly mortgage payment, according to research produced by Countrywide.
The study suggests that in 31 of the 32 boroughs in London it is cheaper to rent than buy and in 23 of the boroughs it was at least ten per cent cheaper. This has risen from 19 out of 32 since last year’s report.
Countrywide’s report revealed that the significant increase in house price over the last 12 months has made renting the more viable option for people looking to move into the inner, and a growing number of outer, London boroughs.
The average monthly rent across England increased by approximately 1.8 per cent this past year, but the rental market varies dramatically across the different regions. The rent increase in Greater London was 5.1 per cent, suggesting that the demand for rental properties has been driven by new jobs being created and by tenants trying to find properties with lower rent prices.
Between the end of 2012 and now, Ealing, Southwark, Lewisham and Greenwich joined ranks with the other London boroughs where renting a property was ten per cent cheaper than owning it. The average tenant is now £4,200, or 16 per cent, better off a year compared to mortgage holders. According to the study, this is the case even if they can afford to put down a ten per cent deposit.
Wages are disproportionate in London compared to the rest of the country. For example, there has been growth in wages earned by employees working in the private sector compared to places in the north and the Midlands where wages have fallen as there are more people employed in the public sector. This means that in these areas, rental growth has been constrained.
Nick Dunning, group commercial director at Countrywide, said: “The cost of buying increased more quickly than the cost of renting in all but three London Boroughs making renting more financially attractive to tenants.”