Lockdown leaves first-time buyers in Scotland £1800 a year better off than renters

7 April 2021

First-time buyers in Scotland are racking up savings of more than £1,800 a year compared to those who are renting, according to the latest data from Bank of Scotland.

This is almost double since before the start of the pandemic, as the gap between the cost of buying and renting has stretched 11% in Scotland in the past year. 

The Bank of Scotland Buying vs Renting Review is based on the housing costs* associated with a mortgage on a three-bed home, compared to the average monthly rent of the same property type.

Monthly rental costs have increased by 6% to £683 in the past year, while monthly buying costs have decreased by 5% to £527 during the same period.

The average first-time buyer deposit amount put down in Scotland has gone up £5,158 since before the start of the pandemic (March 2020) to £36,085, as the average deposit has risen from 20% to 23%. The average advance has therefore reduced over the last year with mortgage payments as a result decreasing, whereas rental payments have increased. 

Over the past decade, average UK monthly buying costs have increased by almost a third (31%), while the cost of renting has gone up by 36% during that time. The starkest contrast was when the gap reached 17% in 2015 – £123 per month – and tightest in 2019. This was primarily driven by increased average mortgage payments and the rise in the deposit amount. 

Graham Blair, Mortgages Director, Bank of Scotland, said: “Lockdown restrictions may have held back renters planning to buy a property during the past year with its practical challenges, and while the Land and Buildings Transaction Tax holiday race and pent-up demand have helped drive record levels of mortgage approvals, the cost of renting has crept up in the same period.

“Raising a deposit is still the biggest challenge for those looking to get on to the property ladder, and although the average first-time buyer deposit has risen by £5,000 since the start of the pandemic, property in Scotland still offers real value for money for people looking to buy their first home compared to other areas across the UK.

“We know that first-time buyers will benefit from steps that make finding a deposit more of a reality and the new First Home Fund could be a game changer for those saving hard to take the first step while often still paying rent at the same time.”

The data showed that looking at different regions across the UK, first-time buyers in London are on average £4,606 a year better off than those renting. In the South East buyers are £2,578 a year better off, followed by East Anglia (£2,019) and Scotland (£1,868).

The slimmest gap between buying and renting is in Northern Ireland, where buyers are £539 a year better off, followed by East Midlands, where homeowners are saving on average £897 and Yorkshire and the Humber, where buyers are ending up with around £863 a year compared to those who are renting.