HOUSEHOLDERS in Scotland are almost £325 a year better off if they buy their own home instead of renting, a report has revealed.
The average cost of a mortgage north of the Border is 5 per cent cheaper than the typical rent, says a study by Halifax.
However, the gap is smaller in Scotland than many other areas of the UK, where the average householder can save almost £900 a year if they buy rather than rent. Yorkshire, Humberside and Wales are the only areas where it is more expensive.
The situation has reversed over the past five years due to the drop in house prices and higher demand in the rental market. In 2008, home buying costs were more than £4,200 per year higher than renting.
“Lower mortgage rates and declining house prices have substantially reduced the cost of buying over the past six years,” said Martin Ellis, a housing economist at Halifax.
“Nevertheless, the number of home buyers in the 12 months to June 2013 was nearly half of that in 2008, which will have been constrained by worries over job security.
“We understand that building a deposit is still a key challenge for those looking to get on the ladder although, once this has been achieved, buying is much more affordable. Whilst optimism in the housing market has improved in recent months, these factors remain key obstacles to home purchases.”
The average monthly costs associated with buying a three-bedroom house stood at £672 in June this year – £73 or 10 per cent lower than the typical monthly rent of £745 paid on the same property type.
“For many decades the private rented sector had been a minority tenure offering flexible stop-gap accommodation for the likes of students, those relocating and for those leaving home who are saving for a deposit and hoping to buy a new house,” said Sarah Speirs, director of the Royal Institution of Chartered Surveyors Scotland.
“Today, many families and individuals are left with no choice but to take up long-term residency in rented accommodation, due to lack of access to home ownership or the social rented sector.
“In order to buy a home, large deposits required are, despite government efforts to provide assistance, still beyond the reach of many first-time buyers.”
Falling mortgage payments, driven by a record low in the Bank of England base rate, have made house buying more affordable in recent years.
There are now signs of increasing market activity, with the number of home buyers rising by 3 per cent compared to the same period in 2012.
Kirsten Stuart, of estate agency Strutt & Parker, said: “For a safe long-term investment, there’s very little that can compare with bricks and mortar and if you are actually saving money at the same time, it’s a no-brainer.”