Tenants pay £200,000 more for housing than home owners

| June 21, 2012 | 0 Comments
Tenants pay £200,000 more for housing than home owners

Over a lifetime, a tenant will pay nearly £200,000 more for their accommodation than a homeowner, Barclays suggests in a new study.

Over a fifty-year period it costs an average of £429,000 to purchase a property through a mortgage and to maintain it, the study says, while renting a home for fifty years would cost £623,000.

Renting is cheaper initially, as mortgage repayments are generally significantly higher than rental costs.

House buyers also have to pay a deposit to secure a mortgage, as well as stamp duty and solicitors fees.

The high deposits demanded by lenders since the credit crunch have pushed many potential home owners into the rental market instead.

Home owners also have ongoing maintenance and insurance costs for their property.

However these costs will be more than offset by the benefit of property ownership when the mortgage is paid off and this can increase the advantage of owning over renting to £595,000.

There are some wide regional differences in the comparative costs of buying and rent.

In the South West buying beats renting by just £34,000, while in London, where house price are high, buying beats renting by £396,000, according to the study.

Andy Gray, head of mortgages at Barclays, said: “The cost of stepping on or moving up the housing ladder can be a big barrier for many, but the long term benefits hugely exceed the initial expense.

“Not only will you save money by becoming an owner occupier, but you will also own a substantial asset once your mortgage is paid off, providing financial security for your old age.”

In related news, a Reuters poll suggest that the price of property will not rise until at least 2014.

House prices have fallen by around 20 per cent over the past five years and a further fall of 1.6 per cent is expected this year.

Tags: , housing costs, price of property, renting

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