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Buying is better move than renting for Scottish first time buyers

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Staff writer ▼ | February 22, 2016
Scotland home
Houses in Scotland   The average monthly buying cost in Scotland was £5252

First-time buyers in Scotland are on average £1,440 (19%) a year better off with their own home compared to those who rent, according to research by Bank of Scotland.

The average monthly buying cost (including mortgage payments) associated with a first-time buyer buying a three bedroom house stood at £5252 in December 2015; £120 (or 19%) lower than the typical monthly rent of £6453 paid on the same property type.

This represents an increase of £659 over the past year compared with the annual saving associated with buying a home instead of renting of £781 in 2014. The difference has grown as result of average monthly rents rising by £46 (8%) compared to a £9 (2%) decrease in monthly buying costs.

The financial gap between buying and renting is almost treble the annual saving of £548 in 2010 to the current level of £1,440. Over this period, the average rent has grown by 20% (£109 a month) from £536 whilst average buying costs have increased by 7% (£35 a month) from £490. The last time renting was the cheaper option was in 2008 (£573 against £755).

First time buyers in the North West save the most by buying a property rather than renting. Average monthly buying costs there (£525) are 20% less expensive (£133) than average monthly rental costs (£658).

Scotland is close behind, with a 19% (£120) monthly saving buying a property. In both Northern Ireland and Wales it is 18% cheaper a month (£85 and £103 respectively) to buy than rent.

On the other hand, average monthly buying costs (£965) in the South East are higher (£65) than average monthly rental costs (£900) – the only UK region where renting is the cheaper option.

The number of first-time buyers in Scotland is estimated4 to have totalled 27,900 in 2015; largely unchanged from 27,700 in 2014. This represents an increase of two-thirds (67%) since the number of first-time buyers fell to a recent low of 16,700 in 2011.

The number of first-time buyers accounted for 46%5 of all house purchases made with a mortgage in 2015. This share has grown from 35% at the start of the housing downturn in 2007.

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