Yes, renting has become cheaper than buying for the first time in six years, except for North East, North West, Yorkshire, Humber and Scotland, where they are the only places where it is still less costly to buy than rent. For all other areas renting has become cheaper, and all estate agents in Sittingbourne will agree!
Many factors have concluded that renting is cheaper than buying.
Property prices have risen for several reasons, including the SDLT holiday from the end of June until the end of September 2021, which has encouraged many to buy homes. Another important contributing factor is the government’s 95% mortgage guarantee scheme. This has tempted many potential buyers to go ahead with their purchases. In addition, mortgage offers which were cut off due to the pandemic have been started again.
It came to a point where demand exceeded the supply. The profitable schemes made more first-time buyers enter the market. Few who were on renting have made their move to buy their first homes. Those who already had homes were looking for more spacious accommodation and outdoor garden space. With more people working from home, the need for space was more. So many started moving to suburbs where homes are larger and cheaper.
Competitive mortgage rates
Lenders were stringent at the beginning of the pandemic, and competitive mortgage deals were withdrawn. Mortgage eligibility became strict, making home buying unaffordable to many. Low deposit mortgages were hard to come by. Credit ratings were made higher, and with uncertainty looming in, people losing jobs and unsure about the future added to people staying in rented homes. Later low deposit mortgage deals started reappearing. Though only a 5% or 10% deposit was required, the interest rates were high, making rentals cheaper than mortgage payments.
Demand in the suburbs: Many people started moving to smaller towns and suburbs after the pandemic. Since the lockdown was placed and most started working from home, the need for larger space rose. This made people choose homes from the boroughs and smaller towns. Hence there was more accommodation available in the city. Landlords were forced to reduce the rent to find tenants.
Lockdown: Since the lockdown was imposed, several abroad student left their accommodation as schools and universities were closed. This made more houses available in the market. More young people stayed in cities for work left to their family homes to save on rent as there was uncertainty for their jobs. Even Airbnb owners rented fully furnished apartments at heavily discounted prices and moved from short-term to long-term tenancy
Uncertainty in house price: As property prices rose with SDLT and furlough schemes, many were wary of buying houses at higher prices fearing the rates would fall once the scheme was over. Some thought it was wise to stay in rentals until the average costs of houses decreased.
Conclusion: Rental market has reached an all-time high, and it is still cheaper to rent than buy in the current circumstances. South East and South West England recorded the highest renting market. As vaccinations are rolled out, the public is anticipating normalcy again. City centres are reopening offices, shops, restaurants, pubs, public entertainment centres and educational institutions. With the rental market being competitive, more people are looking to move back to the city. It is an excellent opportunity for investors to invest in properties and reap high rents in the booming renting market. The Return On Investment is also expected to rise soon.