Should you buy or rent a property as asking rents reach record highs?

Should you buy or rent a property as asking rents reach record highs?

Deciding whether to buy or continue renting is rarely straightforward. The right choice depends on your deposit, income, future plans and the cost of suitable properties in the area where you want to live.

However, the latest Rightmove rental-market figures may encourage more tenants to investigate whether buying a home could offer better long-term value.

The average advertised rent for a property outside London rose by 1.9% during the second quarter of 2026, reaching a record £1,397 per month. This is 2.3% higher than a year ago. In London, the average advertised rent increased by 2% over the quarter to a new record of £2,791 per month, representing annual growth of 2.9%. 

Why are rents still rising?

The number of homes available to rent across Britain is now 1% lower than it was a year ago. This is the first annual fall in rental supply since 2022 and appears to have been caused mainly by fewer new rental properties coming onto the market. 

Although tenant competition is less intense than it was a few years ago, demand continues to exceed the number of suitable properties in many areas. The average rental home now receives ten enquiries, compared with 11 a year ago, 22 at the peak of the market in 2022 and five before the pandemic. 

The figures vary considerably by region. Rental properties in London receive an average of eight enquiries, while those in the North West attract around 14. Annual rent growth in the North East and North West stands at 4.1%, compared with 1.5% in the East Midlands and East of England. 

Is paying a mortgage better than paying rent?

Many renters understandably feel that they would rather put their monthly payments towards a home they own.

Someone paying the average rent of £1,397 outside London will spend £16,764 over a year. A tenant paying the London average of £2,791 will spend £33,492 annually.

Renting does not build equity in a property, whereas part of a capital-repayment mortgage payment gradually reduces the outstanding loan. Homeowners may also benefit if the value of their property rises over the long term.

Nevertheless, comparing rent directly with a mortgage payment can be misleading. Buyers must also budget for a deposit, legal fees, valuation costs, surveys, stamp duty where applicable, insurance, maintenance and potential service charges.

Mortgage payments may also rise when a fixed-rate deal ends, while homeowners are responsible for repairing and maintaining their property.

When could buying be the better option?

Buying may make sense when you:

• Expect to remain in the property for several years.

• Have a sufficient deposit and emergency savings.

• Have a dependable income and manageable financial commitments.

• Can comfortably afford the mortgage and associated ownership costs.

• Want greater security and control over your home.

• Are prepared to maintain the property.

The longer you remain in a home, the more opportunity there is to spread the initial purchasing costs. Selling again after a short period can be expensive because of estate agency fees, legal costs and potentially an early repayment charge on the mortgage.

Buying can also provide more certainty. Subject to keeping up with the mortgage payments, homeowners do not need to worry about a landlord deciding to sell or refusing to renew a tenancy.

Owners are normally free to decorate, renovate or extend their homes, subject to planning permission, lease restrictions and lender approval where required.

A new report from the Association of British Insurers, Pensions Adequacy: Housing, Households and Auto-Enrolment, highlights that almost two million more people are expected to retire without owning their home, marking a major shift in how future generations will experience retirement. 

Click here to read our best first time buyer mortgage blog.

When could renting still be more suitable?

Renting can be the more practical choice when you:

• May relocate for work or family reasons.

• Are unsure where you want to live permanently.

• Have not yet saved a sufficient deposit.

• Need flexibility rather than a long-term commitment.

• Would struggle with repair and maintenance costs.

• Have an income that makes mortgage approval difficult at present.

Renting also allows someone to test an area before purchasing. This may be particularly valuable when moving to a new city, changing jobs or deciding whether a location is suitable for commuting, schools and family life.

Tenants do not normally need to meet major repair costs. A homeowner facing problems with a roof, boiler or structural issue could potentially receive a substantial and unexpected bill.

Could your rent payment demonstrate mortgage affordability?

A long history of paying rent on time can show that you are accustomed to meeting a significant monthly housing cost. However, mortgage lenders do not simply replace a rental payment with an equivalent mortgage payment.

They assess income, credit commitments, childcare costs, dependants, credit history, mortgage term and other regular expenditure. They also stress-test affordability to ensure the mortgage remains manageable under their lending rules.

Some first-time buyer mortgages are designed for people with smaller deposits, while selected lenders offer enhanced affordability or higher income multiples for eligible applicants.

Nationwide, for example, has recently lowered the joint-income threshold for some applicants seeking borrowing of up to six times income from £100,000 to £75,000. This could help more home movers and borrowers raising additional funds, although receiving the maximum multiple is not guaranteed.

How much deposit do you need?

A range of lenders offer mortgages requiring deposits of 5%, while a smaller number may consider applications with an even lower deposit.

A larger deposit will usually provide access to a broader selection of mortgage rates and may reduce the monthly payment. Buyers should avoid using every pound of their savings for the deposit and purchase costs, because retaining an emergency fund is important.

As an illustration, someone buying a £350,000 property with a 5% deposit would need £17,500 before accounting for legal fees, surveys, mortgage fees and any stamp duty.

The required deposit may be higher for new-build properties, unusual homes, flats above commercial premises or properties with construction or condition issues.

Click here to read our tenant buying from landlord mortgage blog.

Should you wait for mortgage rates or house prices to fall?

Trying to identify the perfect time to buy is extremely difficult. Mortgage rates, property prices and lending criteria can all change, sometimes in different directions.

A fall in mortgage rates could improve affordability, but it may also bring more buyers into the market and increase competition for properties. Falling prices may appear helpful, but lenders can become more cautious during weaker markets.

Rather than trying to predict the precise bottom of the market, prospective buyers should concentrate on whether they can comfortably afford the property and expect to remain there for long enough to justify the purchasing costs.

Aaron Strutt of Trinity Financial comments

“Record rents will inevitably make more tenants question whether it is time to buy their first home. In some cases, the monthly cost of a mortgage may be similar to the rent they are already paying, although buyers also need to account for maintenance, insurance and the other costs associated with owning a property.

“One of the biggest obstacles is still raising the deposit. However, lenders have introduced more low-deposit mortgages and increasingly generous affordability rules to help suitable borrowers get onto the property ladder.

“Buying will not be right for everyone. Tenants who need flexibility or expect to move again soon may be better off renting. Those planning to remain in one place for several years should investigate how much they could borrow rather than assuming homeownership is beyond their reach.”

How Trinity Financial’s mortgage brokers can help

Before deciding whether to buy or continue renting, it is helpful to establish how much you could realistically borrow and what the monthly mortgage payments would be.

Trinity Financial’s mortgage brokers can:

• Calculate your likely borrowing capacity.

• Compare low-deposit and first-time buyer mortgages.

• Assess income from salaries, bonuses, commission or self-employment.

• Explain the fees and costs involved in buying.

• Compare different mortgage terms and repayment structures.

• Arrange an agreement in principle before you start viewing properties.

The most suitable decision is not simply determined by whether a mortgage payment is lower than the rent. It should be based on affordability, financial security and how long you expect to remain in the property.

Speak to a Trinity Financial adviser today

The mortgage market moves fast — and the right advice can make a significant difference to the rate and deal you secure. Get in touch with our team to discuss your options.

Call Trinity Financial on 020 7016 0790 to secure a fixed or tracker rate mortgage, book a consultation, or use our appointment calendar

The information contained within was correct at the time of publication but is subject to change. It is for general information purposes and is not advice.

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Source:  Thenegotiator.co.uk