Tenants could end up paying £1m more over their lifetime by renting rather than buying, research claims.
Analysis by developer Strata compared the cost of owning a home in the UK to average monthly rental payments over a 60-year period.
The research – based on renting from age 21 to 30 before buying and owning a property until age 81 – took the average first-time buyer property value of £212,079, assumed a 16% deposit and £4,800 of fees including lender valuations, surveys and mortgage and legal costs.
It then estimates that buyers would have rented for nine years prior to getting on the property ladder, at an average of £909 a month, adjusted for inflation over the period. This gives a total spend of 427,363.
In contrast, lifetime renters will spend £909 a month on average, which when adjusted for inflation would reach a total of £1,624,980 over a 60-year period.
That equates to a difference of £1,197,616 with lifetime renters spending 280% more than buyers.
Figures across the UK vary dramatically, with differences in London reaching almost £2m in London.
The north-east had the smallest disparity at £720,000.
Comments (8)
Usual stupid comparison of paying a mortgage versus paying rent.
Also ignores capital expenditure, like boilers, repairs, and furnishings.
The average annual income in the UK is £27,200. This means the average lifetime income over 40 years is just above £1m at £1,088,000.
Are ‘lifetime’ renters facing paying £1m MORE than owners? Nah…
This figure is reached by adjusting for future inflation, which means that the figure is notional and no longer means much.
“This means the average lifetime income over 40 years is just above £1m at £1,088,000.”
Assuming ZERO rise in income over FORTY YEARS?
You must be looking only at Estate Agents…
I don’t see where it takes in to account moving home? I doubt that £200k first time buyer home would have the space and suitability for a baby and then a young family, moving on to teenager, then young adult and taking in to account the usual physical deterioration of age that mean the older generation usually move into bungalows? Also fluctuating interest rates, property values changing, remortgage fees and mortgage/life/CI insurances?
One of the projects we gave to our summer intern a couple of years back was to make this analysis available for every property as a way to demonstrate to generation rent why with a change of mindset it is possible to own rather than rent.
For every outcode area we’re able to project forward and predict capital growth as a way of explaining how accrued property wealth is not an exclusive Brucey Bonus for Baby Boomers. How capital appreciation over the lifetime of a mortgage compounds up at about £2,276 every single month on the current transaction averages and trends
Based on what mortgage rate?
So buy! I bet this does not factor in such items as moving costs due to relocation of work and many other factors that happen in real life!