Renting vs buying: is now a great time to purchase your first home or in the event you hold back until 2022?

For the first time in nearly seven years, renters are paying less each month than first-time buyers.

That’s according to a new report by Hamptons, which found rising mortgage rates and falling rents during the pandemic have swung the total amount towards tenants.

Here, Which? explains whereby the nation renters are benefiting the most, and offers advice on the price of making towards the property ladder.

Renters best than homeowners for first time since 2021

A new report by Hamptons claims that renters are actually lb71 per month better off than homeowners.

The estate agency says that the very first time since December 2021, renters are paying less every month than individuals with a 90% mortgage.

Before the pandemic hit last March, it was a really different story – with buyers that had 10% deposits more than lb100 per month better off than renters.

On average, tenants in the UK spend lb1,054 on rent each month, while homeowners with 90% mortgages pay lb1,125.

How do price varies round the UK?

Hamptons states that before the pandemic, it had been cheaper to possess a home than rent in each and every region of the nation.

Now though, things are different, with only three of Great Britain’s 11 regions cheaper for buyers than tenants.

London has witnessed the biggest shift, with rents falling significantly because the start of the Covid-19 outbreak.

Before the pandemic, a buyer having a 10% deposit would have saved lb123 each month, however the swing means renters are now lb251 best.

Scotland, the North East of England and Yorkshire and the Humber would be the three regions bucking the popularity.

Are home loan rates responsible?

The pandemic has already established a significant impact on the price of mortgages for first-time buyers, which is likely to be the largest contributor to Hamptons’ findings.

During the first lockdown, nine in 10 90% and 95% mortgages were withdrawn in the market, and when 90% deals returned last Autumn, they were significantly more expensive than before the pandemic.

The government’s proceed to introduce the mortgage guarantee scheme – which encourages lenders to provide 95% mortgages – could over time reverse this trend.

Since the scheme’s launch in April, we’ve already seen rates begin to drop. If this trend filters down to 90% mortgages within the coming months, first-time buyers can access more appealing deals and cut the price of owning a home.

What may happen to accommodate prices during the remainder of 2021?

Hamptons predicts that the balance may swing back towards buyers later this season as rents start to rise and home loan rates fall, but much depends on what happens to house prices after the stamp duty holiday ends.

House prices have been turbo-charged recently, with buyers scrambling to complete deals and shave as much as lb15,000 business tax bill.

The Land Registry’s newest data shows house prices are up nearly 9% year-on-year, while figures from HMRC show that a lot more than 100,000 transactions are going through every month, well more than pre-pandemic levels.

House prices happen to be rising at an unsustainable rate, and it’s highly likely that the market will decelerate in the second half of the year, leading to price growth slowing. In certain areas prices might even fall slightly from their current levels.

Is now a bad time to buy a house?

If you’re looking to buy the first home and have in the bank a first deposit, you might be best holding fire until the market decelerates.

The stamp duty break has only been of limited use to first-time buyers. The vast majority of first-time buyers in England and Northern Ireland were already exempt in the tax, due to the generous lb300,000 threshold open to people buying their first home.

People buying a home at this time are likely to be buying right towards the top of the market, so it’s vital that you think carefully before proceeding.

If you purchase now and costs drop in the short term, your home will be worth less than you purchased it for, and you could even find themselves in negative equity.

With this in mind, it’s best to only make the move if you’re likely to maintain the house not less than a couple of years, as the market will hopefully have experienced a chance to stabilise post-pandemic by the time you look to progress up the ladder.

Am I prepared to buy my own home?

If you’ve been renting a house for a long time and also have been striving in order to save a first deposit, you most likely can’t wait to obtain to the property ladder.

Buying a house means you won’t pay ‘dead’ money to some landlord every month. Instead, you’ll be investing it in your asset, growing your equity over time. Additionally, you’ll cover the cost of a house truly ‘yours’ without worrying about inventories and deposits.

Knowing when it’s the best time for you to buy isn’t just about the market, it’s about whether you’re ready for the financial budget of being a homeowner.

Our guide on the price of buying a house explains the key things you’ll have to factor in when purchasing a home, for example mortgage fees, surveys and conveyancing.

In addition, a good a glance at our advice on household bills, which explains the different utility, insurance and maintenance costs you might face as a homeowner.

If you are prepared to accept leap, our guide on finding the best places to live provides useful tips on comparing areas and finding the next hotspot.