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Video transcript
For many years the question has been raised as to whether it is more affordable for people to take the leap of faith and make their first purchase on the UK property ladder, or if they should instead stay in rented accommodation?Well, that question has now been answered, as new research from Lloyds Bank shows that the savings gap - the difference in the amount that homeowners and renters are able to save each month - has more than doubled during the last five years.
According to the bank`s figures, the annual savings gap stood at £865 for the year in 2015 - an upturn from the figure of £760 that was recorded in 2014.
The report showed that the average monthly buying cost, including mortgage payments, associated with a first-time buyer purchasing a typical three-bedroom home in the UK stood at £6,722 in December 2015.
This compared to the typical cost of £7,443 paid on the same property type for individuals in the rental sector during the same timeframe.
Indeed, the difference between the costs for home purchase and rent have become increasingly stark in recent years, with the current more than £800 difference now twice what it was in 2010, when a gap of almost £400 per year was the norm.
Responding to the report, mortgage director at Lloyds Bank Mike Songer said that one of the main factors to have influenced this difference in recent years has been the record-low level of interest rates that helped to keep mortgage borrowing affordable for many.
At the same time, average rents have increased up and down the country, meaning taking the leap to make a first-time property purchase has become an increasingly attractive option for many Brits.
Improving economic conditions have also played a role in helping to enhance the affordability of homeownership, while government schemes like Help to Buy have also served to considerably boost first-time buyer numbers.
Looking forward, Mr Songer now believes the widening gap between rental costs and those of homeowners across the UK could grow further in the coming months, meaning first-time buyers could be increasingly better off in comparison to those in the rental sector for the foreseeable future.
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