Buying 6% cheaper than renting

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by Gill Montia

Buying a home in Scotland is cheaper than renting, according to Bank of Scotland.

For a three-bedroom house, the typical mortgage payment in the region amounted to £510 in December, or 6% less than the monthly rent of £540 for the same type of property.

According to the lender’s research, average home buying costs have fallen by more than a quarter (£330) since 2008.

Over the past year, mortgage costs have continued to drop but the cost of renting has risen by 1% on average, continuing the trends seen in 2010.

While Scotland is one of the most cost-effective locations for buying relative to renting, the same was true of eleven out of the twelve UK regions in December.

Wales alone bucked the trend with an average mortgage cost of £479 for a home buyer, compared with average rent of £474.

In Greater London, the typical home buyer is paying 10.2% less per month than the typical private tenant (£1,089 versus £1,212).

However, many private renters are unable to make the switch to home ownership because of the ongoing challenge of raising a deposit.

Last week, a new report on Britain’s “squeezed middle” claimed that a radical shift is taking place in the housing market among the low to middle income bracket (LMI).

According to the Resolution Foundation, in the last six years, the number of LMIs aged under 35 and owning a home has nose dived from 51% to 34%.

With high deposit requirements and limited mortgage availability for first-time buyers, the think tank reckons that almost one half of younger LMI’s are currently stuck in private rented accommodation.