One of the biggest incentives to buy a home instead of renting is that mortgage payments are often lower than rent.
Although this is not always the case, a new study has usefully highlighted those areas in England and Wales where buying is significantly cheaper than being a renter.
Analysis by property and conveyancing lawyers Jones Whyte has found that Portsmouth is the city that offers the best value when it comes to buying versus renting.
It examined the latest government data on house prices, rents and household income and found that typical mortgage costs in Portsmouth are 12.99% lower than rental prices.
The average house price in Portsmouth, said Jones Whyte, was indeed £251,343 – this equates to a monthly mortgage payment of £1,128, which is £168 less than the average rental price of £1,296.
But Portsmouth is one of many local authorities in Britain where the cost of buying a house is lower than renting one
For each area, Jones Whyte calculated the monthly cost of purchasing a home using a representative mortgage with a 4% interest rate, a 25-year repayment term and a 15% down payment, based on the average house price in each location. It then compiled a list of the top ten.
Close behind Portsmouth as the second most affordable local authority when it comes to buying versus renting was Burnley, where it was 12.96% cheaper to pay off a mortgage. The monthly mortgage cost was £507 and the average rent was £75 more per month at £582.
Manchester followed in third place. Here the mortgage was £1,124 and the rent £142 more expensive, on average £1,266, a difference of 11.18%.
Michael McLean, partner and lawyer at Jones Whyte, said: “Historically, renting has often been cheaper than buying.
“However, this is becoming less and less true as time goes by, prompting us to look at how much cheaper renting was than buying a house, and whether there were areas where it was cheaper to buy than rent.
“We found fourteen local authorities where a representative mortgage costs less than average rents, including major cities such as Manchester and even a London borough in Tower Hamlets.
“This could reflect how desirable moving to these areas may be, and that rents in these areas may have risen faster in response compared to housing costs.”
The 10 UK areas where it is best to buy at the relative price of a mortgage compared to rent (source: Jones Whyte)
| Rank | Local authority | Average house price | Monthly mortgage repayment | Average monthly rental costs | How much cheaper is buying than renting (%) | How much cheaper is buying than renting (£) |
| 1 | Portsmouth | £251,343 | £1,128 | £1,296 | 12.99% | £168 |
| 2 | Burnley | £112,910 | £507 | £582 | 12.96% | £75 |
| 3 | Manchester | £250,623 | £1,124 | £1,266 | 11.18% | £142 |
| 4 | Bristol | £354,210 | £1,589 | £1,741 | 8.72% | £152 |
| 5 | Newcastle upon Tyne | £207,373 | £930 | £1,005 | 7.42% | £75 |
| 6 | Southampton | £242,286 | £1,087 | £1,172 | 7.25% | £85 |
| 7 | Tower Hamlets | £481,699 | £2,161 | £2,294 | 5.79% | £133 |
| 8 | Nottingham | £201,001 | £902 | £937 | 3.76% | £35 |
| 9 | Southwark | £494,757 | £2,220 | £2,298 | 3.40% | £78 |
| 10 | Lincoln | £185,225 | £831 | £854 | 2.69% | £23 |