BUYING IS NOW CHEAPER THAN RENTING

According to a new study buying a home in Scotland is now 6% cheaper than renting. Average monthly mortgage payments for a three bedroom house in Scotland in December 2011 were £510. The average monthly rent on the same property type was £540. This reverses the position three or four years ago when the average cost of buying was nearly half as much again as the average rent. Apparently the monthly cost of buying a home has fallen by more than a quarter since 2008. This has been largely driven by a 37% decline in average monthly mortgage payments due to the fall in mortgage interest rates. The fall in house prices has also affected the position.

Over 2011 buying costs fell by 6% while renting costs have risen by 1%.

Everything points to buying a property rather than renting being the sensible option. However, the number of buyers continues to decline. This is due to the hurdle of raising a deposit. Lenders are also likely to tighten borrowing criteria in a weak economy.

Rents are being pushed up because of the numbers left trapped in the rental system. On the other hand mortgage rates for a new borrower have been reduced to an average of 3.63% in 2011 from 5.75% in 2008. During the same period the average house price has dropped 17%.

Scotland is currently one of the most cost effective parts of the UK for buying relative to renting. The problem for youngsters is the raising of the deposit and more often than not would be home owners are turning to family members for the deposit. Because parents are also struggling during these difficult times, grand-parents are now often becoming involved. Parents also have their children living in the family home for longer because of the struggle to raise a large deposit.