Facebook founder, Mark Zuckerberg, rents
Mark Zuckerberg, founder of social networking giant Facebook, recently revealed he actually rents his property and doesn’t own it. Whilst, in the early days of Facebook, his money may have been tied up with his business, surely he’s now in a position to buy? According to Forbes his personal wealth stands at $6.9bn…
If ‘Zuck’ was based here in the UK, he may find our latest research of interest…
It shows that the cost of renting has risen further, compared to home ownership in Britain across 50 towns and cities in Britain. Renting a home is now more expensive than buying across 80% of Britain. The figure is up from 74% in July as asking prices have come down and rents have increased.
- Average renter pays 9.9% more than an owner with a 5% mortgage
- York most expensive to rent vs. buy
- Aberdeen cheapest to rent vs. buy
Buying has always been somewhat cheaper than renting, but we’re now seeing a real insider-outsider divide in the housing market. For those who are able to buy a home, costs are low, but for those who can’t, costs are much higher – and the doorway to entry into the housing market is narrower than ever. The freezing up of credit has put home-ownership beyond the reach of many renters, and it’s driving a larger and larger wedge between them and owner-occupiers.
In some locations, the extra cost of renting is staggering. In York rents exceed mortgage payments by 39% – with average monthly rents at £978 York renters are left £3,270 a year worse off. A further thirteen of the largest 50 cities and towns saw rents exceed mortgage payments by more than 20%.
Even in London, which has the highest asking prices in the country, buying is still the most cost-effective option. The average rent of £2,121 per month is still high compared to the average asking price of £444,553, and buyers stand to save 14% annually compared to renters.
We should point out however that, while buying wins over renting today, the impact of a rise in interest rates cannot be ignored. If interest rates were to increase by 1% and rents to remain the same, renting would become more cost-effective in 72% of the locations studied.
Top 10 locations where buying beats renting
|Rank||Location||Avg. Asking Price*||Avg. Monthly Rent*||Rental Premium|
Top 10 locations where renting beats buying
|Rank||Location||Avg.Asking Price*||Avg. Monthly Rent*||Rental Discount|
The full list of 50 towns and cities can be found here
*The research compares current asking prices to average rents for two-bedroom flats in the 50 largest cities and towns around the country. Mortgage payments were calculated assuming an interest-only mortgage at 5% p.a.