Soaring mortgage costs in the capital put buying out of reach for thousands

Soaring mortgage costs in the Capital mean it’s now almost 50% more expensive to buy in London than to rent, research from SBA Property Management reveals.

Mortgage costs across the capital can be be 42% higher than average rental prices – substantially higher than other UK cities like Manchester and Bristol where mortgage costs are only around 20% higher than rent.

HIGHEST

The cost of homeownership is highest in inner London, where mortgage costs are 66% higher than rental prices – meaning buyers fork out an extra £1,232 per month.

Market analysts at London-based SBA Property Management found that across the city homeowners spend around £797 more on mortgage payments than tenants pay on rent each month.

In Kensington and Chelsea homeowners can expect to pay £2,927 more per month on their mortgage than they would do renting.”

In Kensington and Chelsea – the borough with the biggest disparity in rental and mortgage costs – homeowners can expect to pay £2,927 more per month on their mortgage than they would do renting a property in the same area.

While Londoners typically spend 42% more on mortgage payments than rent, in Manchester monthly mortgage costs are only around 16% more per month. In Bristol, the monthly cost of a mortgage is 18% higher than rent.

Elsewhere, mortgage costs in Leeds are roughly 21% higher than the average price of rent, while in Liverpool and Birmingham the rates are 29% and 31% respectively.

CHALLENGING

Tim Darwall-Smith, Director at SBA Property Management, says: “London’s property market has always been challenging for prospective buyers, however in recent years rising house prices and borrowing costs have pushed homeownership even further out of reach for many people.

“A London deposit, along with other costs like stamp duty and legal fees, can take years of saving for – but as the research shows, the cost of buying in the capital is still significantly higher than other parts of the country even after putting down a deposit.

“Rising homeownership costs are steering would-be buyers toward the rental market, as well as other cities where property prices and mortgage costs are more affordable.”