First-timers better off buying than renting

It makes sense for first-time buyers to get on the property ladder as they are around £864 a year better off than those who continue to rent.

New research from Lloyds Bank shows the average cost of a three-bedroom house stood at £672 a year in December, some 10% lower than the typical £744 paid on a similar UK rental property.

The annual saving of £864 marks an increase on last year when the annual saving associated with buying a home was £760.

The difference is largely down to a 3% rise in rents, which has added £24 to the average monthly rent. This compares to an increase in monthly buying costs of just £15.

Today's financial gap between buying and renting is more than double the annual saving of £397 in 2010.

Over this period, the average rent has grown by 23% while average buying costs increased by 17%.

Buying has consistently been the cheaper option since 2009.

Buying is more affordable than renting in every region aside from the South East, where average monthly buying costs of £965 are higher than monthly rental costs of £900.

Mike Songer, mortgage director, Lloyds Bank, said homeowners have been helped by record low mortgage rates and rising private rents.

"This steady improvement in the costs of buying compared to renting has helped to boost the number of first-time buyers over the past few years, who now account for 46% of all home sales in 2015 – up from 36% in 2006.

"Official government schemes, such as Help to Buy have also played a part."