The pandemic has made it cheaper for Britons to rent a home rather than buy for the first time in seven years, despite rents rising over the past year, according to Hamptons.
The average tenant in the UK spent £71 ($100) a month less on rent in May than if they were servicing a 90 per cent loan-to-value mortgage on the same home, research from the real estate agency found.
In comparison, a buyer purchasing a property with a 10 per cent mortgage deposit before the pandemic started would have been £102 better off if they bought a home rather than renting one.
Aneisha Beveridge, Head of Research at Hamptons, said the pandemic has reversed the trend of buying being more cost-effective than renting because of strong house price growth and higher mortgage rates.
“A year ago, lenders were either increasing their rates or withdrawing higher loan-to-value mortgages altogether,” Ms Beveridge said.
“For first-time buyers in particular this pushed up the cost of paying a mortgage, if they could get one at all, to well above the cost of renting.”
Hamptons' cost comparison analysis between renting and buying is based on a consumer placing a 10 per cent deposit on a home to secure a 90 per cent mortgage on a two-year fixed rate. The average annual rate in May was 3.32 per cent, up from 1.94 per cent a year earlier.
The cost of servicing this mortgage is then compared to the cost of renting the same home.
Britain's property market has soared since the start of the pandemic, after a total shutdown of the sector during the first lockdown led to pent-up demand for homes.
Chancellor of the Exchequer Rishi Sunak's stamp duty holiday, first unveiled in July last year and set to expire on June 30, bolstered the market further.
In May, prices surged to an average record high of £261,743, according to the Halifax House Price Index, up 9.5 per cent from the same month a year earlier – equivalent to £22,000 over 12 months.
Meanwhile, rental growth accelerated in May to a record high, with the average cost of a newly-let rental home rising to £1,054 per month, up 7.1 per cent from the same month last year, according to Hamptons’ Monthly Lettings Index.
The regions recording the biggest rises included south-east England, where rents rose 13 per cent and south-west England, with an increase of 11.5 per cent, as many Britons moved out of cities in search of larger homes due to the pandemic.
As a result, London was the only UK region where rents fell, declining 0.5 per cent on the year in May.
While it is currently more cost-effective to rent, Ms Beveridge expects the balance to swing back towards buying once mortgage rates edge down again, although this will be partly offset by rising house prices.
"While interest rates are falling, they’re still considerably above where they were pre-pandemic on higher loan-to-value loans," said Ms Beveridge.
"Despite this, we expect the gap between renting and buying to close over the remainder of this year, moving back towards longer-term levels in 2022.”
KEY DEVELOPMENTS IN MARITIME DISPUTE
2000: Israel withdraws from Lebanon after nearly 30 years without an officially demarcated border. The UN establishes the Blue Line to act as the frontier.
2007: Lebanon and Cyprus define their respective exclusive economic zones to facilitate oil and gas exploration. Israel uses this to define its EEZ with Cyprus
2011: Lebanon disputes Israeli-proposed line and submits documents to UN showing different EEZ. Cyprus offers to mediate without much progress.
2018: Lebanon signs first offshore oil and gas licencing deal with consortium of France’s Total, Italy’s Eni and Russia’s Novatek.
2018-2019: US seeks to mediate between Israel and Lebanon to prevent clashes over oil and gas resources.
Where to submit a sample
Volunteers of all ages can submit DNA samples at centres across Abu Dhabi, including: Abu Dhabi National Exhibition Centre (Adnec), Biogenix Labs in Masdar City, NMC Royal Hospital in Khalifa City, NMC Royal Medical Centre, Abu Dhabi, NMC Royal Women's Hospital, Bareen International Hospital, Al Towayya in Al Ain, NMC Specialty Hospital, Al Ain
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
SPECS
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ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
MORE ON CORONAVIRUS & THE ECONOMY
If you go
The flights
There are direct flights from Dubai to Sofia with FlyDubai (www.flydubai.com) and Wizz Air (www.wizzair.com), from Dh1,164 and Dh822 return including taxes, respectively.
The trip
Plovdiv is 150km from Sofia, with an hourly bus service taking around 2 hours and costing $16 (Dh58). The Rhodopes can be reached from Sofia in between 2-4hours.
The trip was organised by Bulguides (www.bulguides.com), which organises guided trips throughout Bulgaria. Guiding, accommodation, food and transfers from Plovdiv to the mountains and back costs around 170 USD for a four-day, three-night trip.
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, Leon.
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
