Buying vs renting: is it better to own or rent your home?

The balance between the financial benefits of buying a home or renting is swinging back in favour of being a tenant, research suggests.

Homebuyers may have benefited from slower house price growth and falling mortgage rates in recent years to help them buy a property, but the Iran war and high inflation is putting pressure on the cost of borrowing.

Many mortgage lenders have hiked rates in recent weeks, with the average mortgage rate now back above 5%, as of 30 April.

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Research by Rightmove suggests this has now made renting in Great Britain a cheaper option compared to paying a mortgage for the first time since June 2025.

The average advertised monthly rent across Great Britain is currently £1,547, Rightmove said.

This compares with an average new monthly mortgage payment of £1,670 – meaning on average renters pay £123 less per month.

The average mortgage payment uses the average asking price for a home of £373,971, the average two-year fixed rate of 5.35% in April, and assumes a 20% deposit and mortgage term of 30 years.Colleen Babcock, Rightmove’s property expert, said: “Mortgage payments have risen quite sharply in a short space of time for new buyers. It will be interesting to see whether more would‑be buyers turn to renting temporarily while rates remain high, particularly when monthly costs can exceed average rents and the timing of rate cuts is still unclear.”

Renting vs mortgage costs by region

With interest rates unlikely to be cut in the near future and mortgage rates remaining high, renting may be the better option for now in most parts of Britain.

Analysis by Rightmove found Scotland and the North East, where asking prices are lowest, are the only parts of Britain where a typical new mortgage is still cheaper than renting despite higher average mortgage rates.

Paying off a mortgage each month was £141 cheaper than renting in Scotland and £45 less in the North East of England.

London and the South East, where house prices are highest, have the largest gap between average mortgage and rental payments. The property website found renting was £362 and £363 cheaper respectively each month.

Looking at the data more locally, renting is cheaper than a mortgage in more than two-thirds of local authorities, Rightmove said.

The biggest gap was in Westminster, where Rightmove said it is £1,290 cheaper each month to rent than to pay a mortgage.

Those costs could come down though if buyers have a larger mortgage deposit and can find a lower rate.

While the monthly cost of renting may be lower than mortgage payments, there may be differences over the long-term, especially as owning a property typically gives you capital growth as well.

Exclusive analysis of mortgage and rental costs by Moneyfactscompare.co.uk for MoneyWeek in late 2025 found homeowners are £6,600 better off on average than renters when it comes to living in a typical UK home over the past 21 years.

Much depends on where you are on the property ladder.

Adam French, head of news at Moneyfactscompare.co.uk, warned there is a growing ‘two-tier’ property market.

One tier is a group of older homeowners who locked in the low rates of the 2010s and are enjoying the stability and growth of home ownership since buying as an asset, and another priced out, forced to rent for longer and missing out on the wealth-building benefits of ownership.

He suggested buyers who purchased early in the 2010s amid cheap credit and rising wages benefitted from both rising property values and low interest costs, a powerful combination for building wealth.

"However, renters saw little benefit," French said, "with rents rising rapidly to a higher level than typical mortgage repayments throughout the decade, meaning would-be buyers were trapped saving for ever-larger deposits and the affordability gap between renting and buying grew".

He added: "The long period of low rates effectively embedded this advantage as property wealth became the main engine of financial security for millions of homeowners.”

Is it better to rent or buy?

Cost is just one factor when deciding between renting and buying a property.

Renting gives you flexibility while owning a home gives you an asset that typically rises in value and can be more stable as you are in control of your own property.

But high inflation may limit the scope for further interest rate cuts, keeping mortgage costs high.

French said: “Many homeowners' monthly mortgage repayments exceed typical rents after average mortgage rates more than tripled following the Bank of England sharply increasing rates to combat inflation.

"This has dramatically reduced how much buyers can borrow, and house prices have softened as a result with the key dynamic remaining the same: the balance between rates and prices may shift, but the underlying strain on households’ budgets will eventually return to a tolerable range."

Little has changed for a growing number of renters though who are competing for a tighter supply of rental properties which is keeping rents at around the same share of income.

French said: "Not only is it as tough as it has ever been to save for a deposit, but now the immediate financial hit of taking out a mortgage has become even harder to justify.”

That may leave renting as the only option but French says this doesn’t have to be the poor choice it is often portrayed to be, adding: “In a high-rate environment, renting can offer flexibility, particularly for younger workers, those unsure of where they want to settle, or anyone stretching their finances to breaking point to buy.

“Without the burden of maintenance costs or exposure to the risk of falling house prices, renters may find that they can focus on saving or investing in other assets that may offer better returns over time.”