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Homeowners are not as well off as tenants

August 5, 2008 by admin  
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Over the past year the benefits of owning a home as opposed to renting one have plummeted by 75% according to a recent report. This means that in many parts of the country people that are renting a home are actually better off than those that have bought their own home. According to the report tenants are actually faring better than homeowners in around 50% of the country’s regions.

This information was put together by the Abbey Bank in its latest Rent V Buy Index. The data indicates that those purchasing their property rather than renting a property saved around £24,000 last year. However, this year the figure has dropped dramatically to just £5800. Abbey official claim that this situation has been caused by rising property prices and sky high interest rates, which has resulted in rising costs for homeowners that have not necessarily affected those that rent.

As part of the study twelve regions were studies, and out of these it was found that tenants were better off than homeowner in six of the regions. The Abbey made these calculations based on a 90% LTV mortgage at an of 6.5%. Essential home maintenance costs were also taken into account in the survey.

According to the results from the study over a twenty five year period the average homeowner would be facing costs of around £447,925 and over the same period the average tenant would be looking at costs of around £443,736. Possible falls or rises in house prices were not taken into account for the study. A separate study recently carried out also showed that demand for rented homes is currently at its highest in five years, with high interest rates and property prices putting off potential property purchasers.

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Tags: LTV, home maintenance, mortgage, interest rate, Renting, Abbey Bank, renting a property, homeowner

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