With the lack of affordable housing currently available in the United Kingdom we are fast becoming a nation of tenants rather than UK property owners, at one time is was “an Englishman’s home is his castle” but this looks to be dying a death slowly but surely.
New research from UK property website Zoopla is more than just alarming as it shows that it is now cheaper to rent a property in 27 out of 50 UK cities than it is to buy one.
Zoopla surveyed 50 of the United Kingdom’s key cities and the information showed quite clearly that 27 are more affordable for tenants to rent than to buy. Zoopla tracks the cost of renting a two-bedroom home in comparison to the cost of servicing a mortgage on an equivalent property in the same area. The researched is based upon the cost of a median-priced home bought with a 90 per cent mortgage with a 25-year term.
The price difference between buying and renting in certain UK cities was astounding with results showing it was almost a third cheaper to rent in Cambridge, whilst in London it was nearly half.
The survey also revealed that in the UK cities where it was cheaper to buy than rent the difference in cost was nominal.
This change in living circumstances has been attributed mainly to the extremely low interest rates of mortgages, increasing buying demand, and in turn increasing UK property prices.
However, the current situation can not continue on the same course, the government is constantly introducing ways to eat into landlords profits, tax and regulatory changes being the biggest problem, all the while increasing the risk on their investment.
If a large number of landlords decide to jump ship and get out of the game altogether and sell because of this, purchase prices could begin to decline. This would in turn place upward pressure on rental prices, and turn the current market situation on its head.
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