According to research by Hamptons, the cost of renting versus buying a home in the UK has equalised.
With mortgage rates hovering around 5%, the average monthly mortgage payment on a 90% LTV mortgage is now equivalent to the average rental payment.
The average monthly mortgage payment (£1,328) is slightly cheaper than the average rental payment (£1,356).
This time two years ago, renting was £48 per month cheaper than buying.
According to Hamptons, it remains cheaper to rent a home than to buy it on a monthly basis in all four southern regions of England.
Conversely, in regions further north, buying still edges out renting in terms of affordability.
In London, for instance, renting has been more affordable than buying since July 2022, when mortgage rates stood at 3.69%.
However, in the North East, the monthly cost of renting hasn't exceeded the cost of buying since July 2011.
The research indicates that the mortgage rate required to equalise the monthly cost of renting and buying tends to be lower across the south of the country than further north.
According to the latest research, while Londoners with a 10% deposit require rates of around 4.6% to equalise the cost of renting and buying, further north, mortgage rates could rise above 6% to make buying as expensive as renting.
While the cost of buying has been fluctuating with mortgage rates, the rental market has been experiencing its own trends.
In the 12 months to March 2025, the cost of a newly agreed tenancy in Great Britain rose by 1.5% to £1,356 pcm, marking the third consecutive month when annual rental growth has been running below 2%.
Meanwhile, the average cost of renewing a tenancy grew by 4.2% nationally in the 12 months to March, bringing the average cost to £1,250 pcm, £106 a month less than a tenant moving into a new home.
This means the rate of increase for renewed tenancies has been higher than that of new lets in every month since September 2023.
London continues to be a drag on rental growth, with rents down 1.7% on the same time last year.
This puts the average cost of a newly let home in the capital at £2,255 pcm, the lowest level in almost two years.
Slowing rental growth in the capital has been driven by falls in inner London, where prices fell by 4.4% year-on-year, while in outer London rents grew by 1.2%.
Hamptons said the current equilibrium between renting and buying costs is a result of complex economic factors, including inflation, interest rates, and regional variations in property values and rents.
