First-time buyers are saving more than £800 a year as the gap between buying and renting has stretched by 8% over the past 12 months, new data has revealed.

Analysis from Halifax showed that average monthly rental costs have increased by 10% to £821 in the past year, while monthly buying costs have increased by 1% to £753 during the same period.

This difference was only 1% in 2019, which had dropped sharply from the previous year, when the monthly difference between buying versus renting was 10%.

The Halifax Buying vs Renting Review is based on the housing costs associated with a mortgage on a three-bed home, compared to the average monthly rent of the same property type.

Over the past decade, the data showed that average monthly buying costs have increased by almost a third (31%), while the cost of renting has gone up by 36% during that time.

Halifax’s findings revealed the starkest contrast was when the gap reached 17% in 2015 – £123 per month – and tightest in 2019. This was primarily driven by increased average mortgage payments and the rise in the deposit amount.

While the average first-time buyer deposit amount has risen by £11,677 since March 2020 and the start of the pandemic to £58,986, and as the average mortgage payment has increased, Halifax highlighted that low interest rates have meant the average mortgage payment is up less when compared to rental payments.

“Lockdown restrictions may have held back renters planning to buy a property during the past year with its practical challenges, and while the stamp duty holiday race has helped drive record levels of mortgage approvals, the cost of renting has crept up in the same period,” commented Halifax mortgages director, Andrew Asaam.

“Raising a deposit is still the biggest challenge for those looking to get on to the property ladder, but the average first home deposit has gone up by another £11,000 since the start of the pandemic.

“We know that first-time buyers will benefit from steps that make finding a deposit more of a reality and the new Help to Buy Mortgage Guarantee scheme could be a game changer for those saving hard to take the first step and often paying rent at the same time. We have also committed to lending £10bn in 2021 to help people buy their first home this year.”

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