Wed, 14 Nov 07
The gap between buying a home and renting one is narrowing, according to latest figures from Abbey...
Generally speaking, it is still cheaper to buy a property than it is to rent one - despite rising house prices and increases in interest rates. But the price difference between buying and renting has narrowed sharply since last year and in some areas of the country it is now cheaper to rent than it is to buy.
The average cost of buying a home over 25 years is now £437,925, while renting a similar property during the same period would cost £443,736, meaning buying a home is £5,811 or 1.3% cheaper, Abbey said. But the figure has fallen sharply from last year when it was more than £24,000 or 6% cheaper to buy than it was to rent.
And it is now cheaper for those who live in Northern Ireland, Wales and the North West to rent a property than it is to buy one. Abbey blames the situation on the rising cost of property, as well as the five increases in the Bank of England base rate since August last year.
But, it adds, even if renting was cheaper than buying over 25 years, people who had bought a home owned their property outright at the end of the period would gain from a rise in its value.
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