London rents: Why homeowners are £3,000 better off than tenants in the capital every year
London homeowners are a hefty £3,000 better off than those who rent, however the price to secure a deposit in the capital has soared to new highs due to inflation and a limited pool of supply.
According to data by Halifax, those lucky enough to have a place to call their own in the capital spend an average of 12 per cent less per month – with London homeowners paying £1,828 on expenses compared to renters who fork out an average £2,074 on renting costs.
Moreover, the figures showed that annually London homeowners save £2,950 a year as they dodge rising rent costs in the capital.
“Our latest analysis shows that becoming a homeowner can bring significant savings for people. Nationally, homeowners are almost £500 better off than renters each year,” Kim Kinnaird, mortgages director at Halifax said.
She continued: “These benefits are felt most keenly in London, where homeowners are saving nearly £3,000 annually compared to those renting similar properties – a significant figure”.
While it’s many a Londoners dream to eventually secure a place on the housing ladder, Halifax figures show that it has become increasingly difficult as deposits have soared 32 per cent in the last year up £188k in 2022/23 compared to £174k in 2021/22.
This hike has largely been fuelled by a cocktail of high borrowing costs, inflation and low confidence which has made it difficult for prospective buyers.
Matthew Thompson, head of sales at Chestertons, said: “London’s lettings market is extremely competitive which can drive up rents and make home ownership a financially more appealing option in the long term.
“Particularly in the face of inflation, we encounter renters who are reviewing their options and weighing up the pros and cons of renting versus owning.”
He added: “Due to the capital being one of the most challenging markets to buy a property in, we always advise clients to review their situation carefully and ensure that they are ready to make the step on the property ladder.”