Can Buying a Home Be as Affordable as Renting for First-Time Buyers?
Currently renting, but thinking of buying? We chat to experts about how discounted mortgage schemes and falling interest rates make owning a new build home an affordable option.
The Truth About Renting vs Buying for First‑Time Buyers
When it comes to housing myths, the idea that renting is somehow cheaper than owning a home is top of the list. Not only can the monthly outgoings on a mortgage be cheaper than renting in many cases, you’ve also got the big added bonus of building equity in your home, which creates a huge long-term financial boost.
In this article we speak to experts to get the truth about renting vs buying. We also dive into your options if you’re a first-time buyer looking to take that first step onto the housing ladder, especially when it comes to a new build home.
The Rent vs. Mortgage Affordability Myth
The idea of owning your own home seems expensive. But when you break down the costs and look at your monthly payments as a homeowner, they’re often cheaper than renting – especially now that interest rates are beginning to fall again.
Geography does make a difference and the impacts of this can probably be felt most keenly in and around the capital. So is buying cheaper than renting in London? In short, yes it can be.
Matthew Coulson, Founder, Heron Capital, says: “Successive chancellors have made life more difficult for landlords through higher taxes, and those costs have largely been passed on to tenants in the form of higher rents. As landlords’ mortgage rates rose in 2022 and 2023, rents rose too – and once rents go up, they rarely come back down.”
“As a result, in many parts of London it is now significantly more expensive to rent than to buy an equivalent home, depending on deposit and personal circumstances.”
Also – as a first-time buyer, you have a chance to avoid or get a reduction in stamp duty, depending on the value of the home you’re buying. First-time buyers in England pay no stamp duty on homes up to £300,000 and a discounted rate on properties up between £300,001 and £500,000.
The Financial Argument for Buying vs Renting
The market is increasingly pointing to the benefits of getting onto the housing ladder now. The Bank of England interest rate reduction in December has had many experts suggest there will be further reductions in the coming year, meaning that in all likelihood, house prices will start to rise.
Nationwide’s Chief Economist, Robert Gardner, has said that as housing market activity strengthens, annual house price growth is likely to rise to the 2% to 4% range.
Estate agent Savills also forecasts continued growth, predicting prices will increase by 22.5% over the next five years, beginning with a 2% rise in 2026. The sooner you can buy your first home, the sooner you will benefit from those rises and start building equity.
“If you own a property, you’re building up equity – benefiting from any house price rises and creating a savings pot for the future,” explains Matthew.
Real First-Time Buyer Stories: How Others Made It Work
Secondary school teacher Amy and her doctor partner James were renting a two-bedroom house in High Wycombe for £1,400 per month. After reviewing their finances, they realised they could afford to buy and that ownership could be cheaper. They purchased a two-bedroom new build apartment at Abbey Barn Park for £380,000, securing a 3.6% fixed-rate mortgage with monthly payments of £1,300 – £100 cheaper and with all the added benefits of ownership.
“We are so happy in our new home, it’s in a fantastic location, overlooking The Ride – a lovely country park in the heart of the development,” say Amy and James.
“We moved in on 4 July – effectively our own ‘Independence Day’ when we were freed from renting and finally became house owners,” they add.
Berkeley Rate Reducer Mortgage Explained
One of the benefits of the predicted heating up of the housing market is increased mortgage products and schemes in the market to encourage first-time buyers to make the leap and buy their first home. As well as a handy mortgage calculator, Berkeley offers a generous scheme, designed to bring monthly payments down – the Berkeley Own New:
“Berkeley’s Own New scheme has been particularly successful in the South East, where house prices are higher,” says Matthew.
“Instead of offering incentives like cash or stamp duty contributions, the scheme subsidises the buyer’s mortgage, resulting in a significantly lower interest rate and monthly payment compared with standard mortgage products. While eligibility depends on specific criteria, it’s one of several ways affordability has improved,” he explains.
For example, Lombard Square, one of Berkeley’s latest developments in the Royal Borough of Greenwich, has an exclusive interest rate of 0.71% with a 25% deposit. Meaning a £337,500 home with an £84,375 deposit would have monthly payments of just £681.
Lombard Square in Greenwich offers special mortgage rates
Local First Time Buyer Schemes Explained
First-time buyers can also take advantage of First Time Buyer Schemes at Berkeley, such as the one at Regent’s View in East London, for local residents, which is similar to shared ownership.
Alina Popan, Sales Executive at Berkeley, explains: “The scheme is designed to help first-time buyers get onto the property ladder by allowing them to buy less than 50% of the home without paying any rent on the remaining share.”
Alina adds: “Buyers only pay their mortgage, which makes monthly costs much more affordable. Over time, they can ladder up to 100% ownership, benefiting from the full market value of the property, while still having access to all the development’s amenities from day one.”
Regent’s View in East London offers a First Time Buyer Scheme for local residents
Why New Build Homes Are More Affordable Long-Term
New builds are known to be more energy efficient and greener than older buildings – they tend to have A or B EPC ratings and modern insulation, emitting 64% less carbon and coming in at 50% cheaper on heating, water and lighting bills.
Ultimately, Berkeley’s range of new build developments offer a lot to first-time buyers in terms of financial benefits but also lifestyle and community. They present an opportunity to buy stylish, light and airy, open plan homes set in enviable locations across the south. An opportunity for you to put your own stamp on somewhere, as well as start building connections in a neighbourhood of like-minded people.