Tenants better off than homeowners

Written by renxue January 09, 2008 14:39

According to a recent survey the benefits of owning a home rather than renting have plummeted by 75% over the past twelve months, which means that in many of the country's regions tenants that are renting their home are actually better off than those that own their own home.

The report suggests that tenants are actually better off than homeowners in over 50% of the regions in the UK. The information comes from the latest Rent V Buy index, which is put together by the Abbey bank.

According to the report the savings made over twenty five years from buying rather than renting was £24,000 last year. However, this year this figure has plummeted to just over £5800. Twelve regions were surveyed as part of the study, and according to officials from Abbey rising property prices and rocketing interest rates have left the average homebuyer worse off in many of the regions that were looked at.

The calculations used to compile the information are based on a homebuyer taking out a 90% mortgage over a twenty five year period, and is based on a repayment mortgage. The interest rate used to make the calculations is 6.5%. The average mortgage rate used in last year's survey was 5.5%. The survey takes into account essential home maintenance costs.

The result of the study indicate that the average cost of purchasing a home over the twenty five year period would be around £437,925. The average cost of renting a home over the same period of time comes in at around £443,736. The study does not, however, take into account possible house price inflation or house price falls, which could leave homebuyers better or worse off.

Tom Smith
27th November 2007