First-time buyers 'better off purchasing than renting'

First-time buyers 'better off purchasing than renting'

New research has found that people looking to take their first step onto the property ladder may be better off buying than renting.

New research released today (June 15th) by Santander has concluded that the vast majority of first-time buyers for a home credit deal would be better off purchasing a property as opposed to renting one.

Following the government's pledge to help first-time buyers get their foot on the property ladder by increasing the number of new homes available, the mortgage lender conducted a study into the property market in the UK.

It found that, in the aftermath of the worst of the global economic downturn, average monthly rental prices now exceed those for the average repayment on mortgages in every area of the country apart from London.

Therefore, logic suggests that all people seeking a home outside of the capital city may be able to save themselves an average figure of 1,040 per year if they bought their own property instead of paying monthly rent.

Earlier this year, the Council of Mortgage Lenders found that average monthly rent in the UK - excluding London - now stands at just over 420, whereas mortgage repayments per month for first-time buyers equate to an average of 334. This is the equivalent to a saving of 86 per month.

London's property sector remains in its own disconnected bubble away from the rest of the nation, with rental prices within the capital around 56 per cent higher than elsewhere, Santander stated.

The average monthly rent in the city is 701, but because real estate remains expensive to purchase there, fist-time buyers would end up paying around 359 per month on their mortgage.

Phil Cliff, director of mortgages at Santander, said that people in the market for property had been "justifiably cautious" over recent months, but advised that these figures show that the way forward may now be to purchase as opposed to renting.

"The first few months of 2010 have seen rents start to climb which has meant that the savings to be made for potential first-time buyers have grown considerably," he added.

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