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Gap narrowing between cost of buying and renting

Despite the surge in house prices over the last five years, latest figures show that it is still cheaper to buy rather than rent a property but that the gap is narrowing.

Research from Abbey National shows that over a period of 25 years, it is on average around £80,250 cheaper to buy rather than rent a home.

The gap between the cost of renting and buying has narrowed to just 24 per cent compared with 2002 figures which stood at 30 per cent, which Abbey attributes to house price fluctuation.

Figures were calculated by assuming a 4 per cent a year inflation rate over 25 years. Buying costs were based on a 90 per cent repayment mortgage at a fixed rate of 5.5 per cent over the same period.

West Scotland shows the biggest savings at just over £147,902, with the biggest average percentage savings at 47 per cent.

The lowest average saving was in the South-west, where the increase in property prices has made the difference between renting and buying only £16,305, a 5 per cent saving.

Head of mortgage marketing Guy Aldwinkle says: “Homebuyers are still saving considerable sums of money in the long term. However, we have definitely seen the gap between buying and renting narrowing over the past year as house prices have risen – this can clearly be seen in regions like the South-west, South-east and Lon-don, where cost savings between renting and buying have fallen below the average.”

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