As Rent Rises, Is Now a Good Time To Buy?

by | Wednesday 17th May 2023 | Mortgage News

Newly released data from national estate agent Hampton’s shows that average rent for outside London has exceeded £1,000 a month for the first time, clearly displaying the drastic shift in the rental market over recent months. In the capital, where our head office is based, the average rent topped £2,200 a month. So, despite mortgage rates being high and securing a mortgage becoming more of a tricky process because of the economic crisis, is now a good time to buy?

Rent Rises Across the Country

In places like London, renting a property is very common. House and flat prices in general are very high compared to the rest of the country, and many people rent in London for longer periods before buying their first property. The average age range of a first time buying in London is between 34 and 37 years old. In the rest of the country, renting is still a popular thing to do, however cheaper properties north of London mean that people are able to buy sooner and for less financial investment.

As the country feels the very real squeeze of the economic crisis and a looming recession, both mortgage rates and subsequently rental payments have both gone up as well as household bills. Increased mortgage payments on buy to let properties and soaring energy bills have forced many landlords to increase their rent, so that they can still make an income from their properties. Outside of London, average rent increased by 7.8% in a year according to Hamptons. Inside of London rent increased by 17.2%, and the UK as a whole saw rent increases of 11.1% in a year. So, does it actually make more sense to buy rather than rent in an economic crisis?

Should I Buy a Property?

This really depends on what your plans for the future are, how much money you have set aside to invest, and whether or not it is the right time for you to buy personally. Property has always been and is still a very good investment. Property values are still stable at the moment and on the whole are on the increase again after dropping slightly during the first few struggling months of 2023.

We predict that within the new 12 to 18 months, inflation will come down and interest in property will grow again, meaning competition for property will increase along with average value. So, if you are concerned about investing in property that may lose money, of course we can’t 100% accurately predict the future, but it still looks like property is a good investment.

The other concern that a lot of potential buyers have now is mortgage interest rates. Where will they go? Up or down? How much will my mortgage costs me and will it be better than renting?

Mortgage Vs. Rent

The first fairly obvious thing to point out is that if you buy a property with a mortgage and pay it per month, you are paying for your own house. You aren’t giving money to a landlord, you are purchasing more and more of your property per month which on it’s own is much more appealing than renting. The second thing to consider is how much exactly you would pay on a mortgage compared to rent.

Rent is generally calculated by how much the landlord needs to make to make a profit on the property if they have a buy to let mortgage and/or the average rent in the area. So there is rarely much wiggle room or room for negotiation. Mortgage payments are calculated by the loan amount, the interest rate, and the mortgage term. Let’s have a look at some hypothetical comparisons to see which option might be better.

Rental Examples

As we’ve already mentioned, the average rent outside of London is now £1,002 a month. Hypothetically this could be for a 3 bedroom semi detached house in the midlands. That means that you would be spending £12,024 a year on your rent. If the landlord is on an SVR mortgage or a tracker rate mortgage or goes on to a higher mortgage interest rate than they were on before, they could need to increase this rent and you could end up paying more.

Mortgage Examples

The average price of a 3-bedroom semi detached house in the midlands is £265,000. Generally the minimum deposit a borrower can put down with most lenders is 10% although some will allow 95% mortgages and 100% mortgages. That means that you would generally need to put down around £26,500 deposit and borrow a loan of £238,500.

Mortgage rates are higher than they once were due to inflation pressures with some lenders currently offering rates of up to 6%. However there are plenty of lenders offering less than 5% and even less than 4% mortgage rates. Taking a pretty standard rate of 4.5% and taking the mortgage for a period of 35 years, this could cost you £1,135 a month potentially. £13,620 per year paid off your mortgage and an extra £133 a month more than rent. In some cases with lenders, depending on your age you can potentially take a mortgage term of up to 40 years which would also reduce the monthly amount you pay.


The main reason for writing this blog is to illustrate to people that despite the country being in a tough place financially right now, there are still options with both renting and home ownership, despite what you might see in the media. If you find that you don’t want to have any more rent hikes and you think that you might want to buy a property in the near future, all you need to do is give our team of mortgage advisors a quick call and we will be able to go through all your options with you.

If you are currently renting but not quite at the right position to buy, we can help you to plan for the future too. Giving you guidance and helpful tips to make sure that when you are ready, you are in the best position possible. Call our team today for a free initial consultation. 

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