Soaring mortgage costs mean it’s almost 50% more expensive to buy in London
Mortgage costs across the capital are now 42% more than average rents in the city, meaning it’s becoming increasingly hard to buy in London.
Costs are especially high in the more affluent boroughs of inner London, where mortgage payments are roughly 66% or £1,232 more per month than rental costs.
Greenwich, a popular borough for investors and first-time buyers, has mortgage costs averaging at a more reasonable rate of 34% or £563 more per month than rent.
Tim Darwall-Smith, director at SBA Property Management, said: “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.”
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.
The proportion of owner-occupied households with a mortgage has fallen by 4% in London over the last three years.
In the same period, the share of privately rented properties in the capital has increased by the same rate.
Higher financial hurdles associated with homeownership, exacerbated by the cost-of-living crisis, mean that for many people living in London, renting is the only option until enough money can be saved to afford a deposit and cover monthly mortgage costs.
Greenwich, a popular borough for investors and first-time buyers, has mortgage costs averaging at a more reasonable rate of 34% or £563 more per month than rent.
The areas with the greatest step up from rental payments to mortgage costs are Kensington & Chelsea, Richmond upon Thames, City of London and Camden.
In these boroughs, mortgage payments amount to anything from £1,738 to £2,927 more per month than average rental prices.
