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  • Writer's pictureCharlotte Oakley

First time buyers: Is it cheaper to rent or buy?

Updated: Dec 20, 2023

According to Halifax’s recent Owning vs Renting review, the monthly cost of owning a home for first-time buyers is 4% lower than the cost of renting the equivalent property.


The review found that owners paid £971 each month compared to £1,013 for renters, based on housing costs for first-time buyers with a mortgage on a three-bedroom home compared to the average monthly rent of the same property type.


Halifax’s analysis shows that nationally, homeowners are approximately £500 better off per year than renters. These costs vary across the country, with the most significant homeowner savings found in London.



Making the move from renting to home ownership can be daunting with the prospect of raising a deposit, paying legal fees and finding a property that suits you. When trying to determine which option is better for you, consider factors such as your financial readiness, how long you plan to stay in the area, local market conditions and your personal preferences.


Who counts as a First-time buyer?

A person is classified as a first-time buyer if they’re buying their only or main residence and have never owned a property before.

When you come to purchase your first home, you can claim a Stamp Duty Land Tax (SDLT) discount (relief).


A first-time buyer pays no SDLT up to £425,000 and then 5% SDLT on the portion from £425,001 to £625,000.


Example:

You are a first-time buyer and purchase a property for £500,000. The SDLT you owe will be calculated as:

0% on the first £425,000 = £0

5% on the remaining £75,000 = £3,750

total SDLT = £3,750


Speaking with one of our advisors and Your Mortgage Room can help you to evaluate the costs and benefits based on your specific circumstances.


Your home may be repossessed if you do not keep up with your repayments.

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances but will be agreed with you before proceeding.


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