Buy or Rent? What is the Best Financial Decision?

As of April 2026, the average monthly rent across Great Britain is £1,547, according to Rightmove. The average monthly mortgage payment on a typical new purchase is £1,670.

For the first time since June 2025, renting is actually cheaper on a monthly basis.

That gap has opened primarily because mortgage rates climbed sharply earlier in 2026. The average two-year fixed rate peaked above 5.8% before falling back to 5.68% by June.

The monthly cost is only one part of the picture. When you pay rent, that money is gone. When you make a mortgage payment, a portion of it is reducing what you owe on an asset that you own.

Over time, as you pay down the mortgage and if the property holds or increases its value, you are building wealth. Rent builds no wealth for the person paying it.

This does not mean buying is always better. But it means the monthly figure alone is a misleading comparison.

Outside London and the South East, buying often makes financial sense even at current mortgage rates. In cities like Manchester, Liverpool, and Newcastle, first-time buyer mortgage payments are typically below equivalent rents.

In the North East specifically, some analysis suggests buying with a 5% deposit can be 17% cheaper per month than renting an equivalent property.

In those markets, you are building equity in an asset you own for less than you would pay to rent the same home. Over five, ten, or twenty years, that compound effect is significant.

In London, the calculation is different. Average house prices in London are around £526,000. A 5% deposit on that is £26,300, a 10% deposit is £52,600, and the monthly mortgage payment will exceed average rents for most properties.

The gap between renting and buying can be several hundred pounds a month.

If you are in London and can rent cheaply while saving aggressively for a larger deposit, that may be the smarter financial move. Particularly if you invest the difference between your rent and what a mortgage would cost.

Renting also makes sense if you need flexibility. If your job may require you to relocate, or you are not certain where you want to settle long term, the costs of buying and selling a property in a short timeframe (stamp duty, legal fees, estate agent fees) can wipe out any financial benefit.

Most analysis suggests you need to be in a property for at least five years for buying to make financial sense when you factor in all the upfront costs.

Below that threshold, renting is often cheaper in total.

Above five years, buying typically wins, particularly if you are outside London and the South East, and particularly if you factor in the alternative of paying rent indefinitely.

This is real and worth acknowledging. Security of tenure, the ability to make a home your own, not having a landlord who can give you two months’ notice, the stability it provides for families.

These are not financial returns, but they matter to how people live.

The financial decision and the life decision are not always the same decision.

Use our Buy vs Rent Calculator.

Sources: Rightmove Rental Market Report April 2026; Moneyfacts June 2026; ONS Private Rent and House Prices May 2026; Zoopla House Price Index May 2026. This article is for information only and does not constitute financial advice. Property values can fall as well as rise. Past performance is not a reliable indicator of future results.