Renting vs Buying
The cost of renting homes in most major cities of the UK has continued to increase sharply since 2021. Average private rental prices are up 5.7% in the twelve months to August 2025, having already increased by 5.9% over the previous 12 months. However, the increases have been greater for certain regions, with the highest increases being reported in the North East of England, where private rent costs rose by 9.2%.
While homeowners have faced rising mortgage payments due to higher interest rates, renters have been hit with similar cost increases. However, renters face an additional hurdle; with less money left over each month, saving for a house deposit becomes much more difficult. Combine this with the ONS’s report that the average house price in England correlates to over seven times the average earnings of an individual, and it becomes easy to see why renters may believe that owning a property is out of their reach. However, Lloyds has produced data that shows buying your home with a 5% deposit could be possible and may offer significant savings for households in some parts of the UK, despite these challenges.
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UK cities where it could be cheaper to buy a home
The amount of savings that could be secured by buying a home instead of renting varies across the largest cities in the UK outside of London. According to Lloyds’ data, renters in Glasgow are likely to benefit from the largest savings, where the average cost of renting is 31.7% higher than the cost of buying a home at the average first-time property price in the city. The saving equates to nearly £400 in monthly savings, adding up to almost £4,800 annually. Newcastle came second, with renters able to save 19.5% on average, and Edinburgh came third, where renters could save 13.2%. However, not all major cities in the report reflected the opportunity to save money when moving from rented accommodation to buying a first home. Renters in Cardiff and Sheffield could expect their overall costs to increase if they chose to buy instead.
The findings are based on a mortgage interest rate of 4.78% payable on a five-year fixed rate on a repayment mortgage over 30 years, using the average house price in each city as the mortgage amount minus a 5% deposit.
Buying vs Renting cost comparison across major UK cities
| City | Average first-time buyer price | 5% deposit amount | Monthly mortgage cost | Monthly rent cost | Mortgage vs rent saving | Monthly saving | Annual saving |
| Glasgow | £172,000 | £8,600 | £855 | £1,251 | 31.7% | £396 | £4,752 |
| Newcastle | £180,000 | £9,000 | £895 | £1,112 | 19.5% | £217 | £2,604 |
| Edinburgh | £243,000 | £12,150 | £1,208 | £1,392 | 13.2% | £184 | £2,208 |
| Bristol | £311,000 | £15,550 | £1,547 | £1,778 | 13.0% | £231 | £2,772 |
| Manchester | £234,000 | £11,700 | £1,164 | £1,317 | 11.6% | £153 | £1,836 |
| Nottingham | £183,000 | £9,150 | £910 | £996 | 8.6% | £86 | £1,032 |
| Leeds | £209,000 | £10,450 | £1,039 | £1,098 | 5.4% | £59 | £708 |
| Liverpool | £167,000 | £8,350 | £830 | £864 | 3.9% | £34 | £408 |
| Birmingham | £208,000 | £10,400 | £1,034 | £1,068 | 3.2% | £34 | £408 |
| Cardiff | £231,000 | £11,550 | £1,149 | £1,138 | -1.0% | -£11 | -£132 |
| Sheffield | £190,000 | £9,500 | £945 | £893 | -5.8% | -£52 | -£624 |
| GB average | £228,233 | £11,412 | £1,135 | £1,360 | 16.5% | £225 | £2,700 |
Source - Lloyds Bank
Reasons why buying a home could be easier now
Many mortgage lenders are able to offer first-time homebuyers mortgages with smaller deposits and, in some cases, have also eased affordability criteria, helping more borrowers qualify for the amount of mortgage they need. In September, Moneyfacts reported that, “there were 464 deals at 95% LTV and 896 deals at 90% LTV, their highest count since March 2008.” Additionally, despite rising costs and higher rent making it tougher to save, Lloyds’ recent survey found that “45% of prospective first-time buyers who’ve started saving already have £10,000 or more set aside - putting them well on the way to a 5% deposit in many cities.”
How to work out if you are better off buying vs renting
Although the data from Lloyds suggests that buying could provide savings for many renters, this will depend on your own personal finances. First-time buyers who have more than a 5% deposit saved are likely to be offered lower interest rates, leading to even greater savings than those outlined in the table above. Similarly, individuals with smaller deposits seeking a mortgage covering over 95% of the property price may find that there is little to no cost saving in transitioning from renting to home ownership. You can search for the best mortgage interest rates based on your personal circumstances using our mortgage rate comparison tool as well as in our regularly updated article, "Best mortgage rates in the UK".
Finding the best and most suitable mortgage deal can be extremely complex. A good place to start is by speaking with a mortgage broker. Mortgage brokers can tell you which deals are available to you as well as which ones provide the best value. There may even be some merit in understanding whether you should save more money towards your deposit to reduce your overall costs. If you do not have a mortgage broker, you can source one using the online professional directory, Vouchedfor*, where you will find mortgage specialists listed alongside their specialisms and customer reviews. Alternatively, you can contact Habito*, an online mortgage brokering service that does not charge a fee for its services and searches over 90 lenders' mortgages on your behalf. Either way, using the services of a mortgage broker can help you cut through the jargon, secure the best mortgage deal and get help and guidance with your application.
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses or take advantage of any exclusive offers - Habito, Vouchedfor
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