Buying beats renting in Aberdeen, but it pays to rent in London

  • Buyers in Aberdeen will be £99,000 better off compared to renters after 7 years
  • Dundee, Glasgow, Cambridge and Edinburgh also compelling to buy vs. rent
  • Buying in London with a 10% deposit takes 18 years to become more cost effective than renting
  • Bournemouth, Huddersfield, Bedford and Swansea also make sense to rent not buy

Aberdeen is the most cost-effective town in Britain for buying property compared to renting. Over a typical seven year period, the average property owner in the Scottish town can expect to be £99,040 better off compared to the equivalent renter, according to research from property website

The latest Rent vs. Buy analysis from Zoopla shows that it takes buyers in Aberdeen with a 10% just one year of ownership for buying to become more cost effective than renting. The average property price in Aberdeen is currently £206,060 with average monthly rents at £1,275.

London is currently the most renter-friendly location in Britain. After seven years, a typical London renter would be £82,412 better off than a buyer with a 10% deposit of an equivalent property. It would take 18 years for a London buyer with a 10% deposit to begin to be financially better off compared to the equivalent renter. These calculations are based on a conservative estimate of 4% annual house price growth in the capital.

Bournemouth is the second most renter-friendly town in Britain. With average asking prices of £380,206 and average rents of £1,024 it would take twenty two years for a buyer with a 10% deposit to be better off compared to a renter in an equivalent property. After a seven-year period, a typical renter in Bournemouth would be £30,719 better off than a typical buyer with a 10% deposit.

Lawrence Hall of said: “Despite taking longer to be better off financially, London remains the holy-grail in terms of property investment. It is much more buyer-friendly outside the capital but with rising average prices and low savings rates, accumulating a deposit has become increasingly difficult. It is important to remember that whilst renters may be better off in the short to medium term in some areas of the country, buyers are making a long-term investment. With most buyers opting for mortgage terms of 25 years, over the long term, buyers are likely to be better off compared to those who choose to rent.”

The Zoopla Rent vs. Buy methodology compares all of the costs associated with buying or renting as well as increases in asset or savings value over time. The analysis forecasts the amount of time it will take for buying to become more cost effective than renting across the largest towns and cities in Britain and compares how much buyers or renters are financially better off after the average tenure of a house.





Av. Asking Price


Av. Monthly Rent

Amount buyers are better off after 7 years (10% deposit)

































Milton   Keynes








Source: (February 2014)





Av.   Asking Price


Av.   Monthly Rent

Amount   renters are

better   off after 7 Years

(10%   deposit)





















Source: (February 2014)


Alternative loans outperform alternative equities

Investments in peer-to-peer lending models have vastly outpaced the alternative equity market, according to the latest research from privately funded lender West One Loans.

In the year to Q1 2013, private investments in short-term secured loans generated an average yield of 11.2%. Over the same period, FTSE Alternative Investment Market-listed shares provided an average yield of only 0.96% – 11.6 times lower than that of secured alternative lending.

The total annual return generated by secured peer-to-peer investments in short-term loans is 16.9 percentage points above that of the FTSE AIM. Strong yields, and capital secured against real estate, mean that secured peer-to-peer investments provided total returns of up to 11.2% in the year to Q1 2013. Meanwhile, AIM-listed shares over the same period saw weaker dividend yields and capital depreciation, leaving total return from an alternative equity investment at -5.7%.

Mark Abrahams, director at peer-to-peer lender West One Loans, comments, “Equity investments of all sorts are an increasingly risky source of income. And many respected fund managers seem to agree. The medicine of quantitative easing is addictive – and not necessarily the best cure. Even the slightest hint that the authorities could re-impose economic reality is met with panic on exchanges across the world.

“In the hunt for yield, peer-to-peer models are the future. Lenders and borrowers no longer need to squeeze economic activity through Victorian high streets. And many sophisticated investors are flourishing in that environment. The trend for disintermediation is accelerating.”

During the period shown above, between February 2011 and March 2013, the total returns from secured peer-to-peer loans are not only far higher, but far more stable than their equity equivalents. Over this two year period, returns from secured peer-to-peer loans showed a 3% maximum variation, compared to a 55.5% maximum variation in the total annual return from the FTSE AIM.

Mark Abrahams, director at West One Loans, comments, “Equities have their place, but when it comes to funding the most entrepreneurial small businesses, alternative lending has a growing importance too. Peer-to-peer lending is an increasingly popular way to gain access to exciting projects, while secured loans can give investors the guarantee they need that their capital investment is safe.”

“Short-term secured loans can offer sophisticated investors the chance to chart their own approach to small business and development projects. Critically, this is without the risk of owning a portion of these ventures, as is the case with many, far more volatile alternative equities. Equally, by their very nature secured loans don’t expose investors to the risk associated with unsecured peer-to-peer models.”

Scale of Secured Peer-to-Peer Lending

Peer-to-peer funding forms a growing proportion of the wider short-term secured lending market. West One Loans was the first lender to offer sophisticated private investors exposure to this market. Thanks to these private investors, the company has now provided £250 million in total funding to date.

Duncan Kreeger, director at West One Loans, comments, “While the bridging industry in general is growing at an astonishing pace, peer-to-peer models in particular have clear advantages over other funding models. Most importantly, both borrowers and investors get a more personalised product. That’s demonstrated in many ways, including the rapid growth of our own business. For West One Loans as a company, a quarter of a billion pounds is an important lending milestone that underlines the scale of our ambition.”

Scale of the Bridging Industry

Aside from the specific expansion of privately-funded loans, short-term secured loans in general have continued to grow their presence in the UK according to the latest West One Bridging Index.

Industry gross bridging lending in the year to Q1 2013 was £1.60 billion.

This represents 44% annual growth when compared to the same figure in the first quarter of 2012.

On a quarterly basis, growth slowed slightly. However, gross bridging lending still expanded by 2.5% quarter on quarter, or 10.3% on an annualised basis.

Duncan Kreeger, director at West One Loans commented: “Last month the business secretary finally acknowledged the role of alternative finance. But unlike almost every mainstream lender, this industry doesn’t need government help.

“However, Vince Cable is right about one thing – mainstream banks are talking rubbish about a lack of demand for funds from SMEs. Credit-worthy entrepreneurs and small firms are being turned down every day by the more process-driven lenders. That’s why the bridging industry as a whole is providing £5 million pounds every day, to get imaginative business plans and development projects off the ground.”

Moderate house price growth expected in 2012, with wider regional and local variations

Moderate house price growth expected in 2012, with wider regional and local variations

  • National house price growth of 3% forecast in 2012
  • Regional and local variations set to deepen, with unemployment being the key factor
  • New housing supply will remain historically low
  • Rents will continue upwards path, increasing by approximately 5% annually
  • Mortgage market will remain limited as a result of Eurozone turmoil

Stuart Law, Chief Executive of Assetz, examines the outlook for the UK housing market:

“The property market in 2012 is likely to continue in a similar vein as it has both this year and last, with relatively flat house prices buoyed overall by a strong performance in key locations, particularlyLondonand upmarket commuter hotspots in the south east. I expect national house prices to end this year just into positive territory at around 2% versus our original 5% forecast, as a result of the faster than expected public sector job losses and the Eurozone crisis. We expect that this will be followed by an increase in values of around 3% in 2012, with many parts of the country seeing no growth or marginal price falls.

“The quantitative easing programme announced in October will introduce further liquidity to the markets as we head into next year and support real asset prices over the short to medium term. However, it is too soon to see the effect of the Eurozone crisis which will continue to impact the markets, limit the amountUKbanks are able to lend and, perhaps most importantly, stifle consumer confidence.

“In popular residential areas where there is good infrastructure and a sound employment market, buyer demand will continue to outstrip supply. Areas which are reliant on manufacturing or the public sector, which are struggling with high levels of unemployment, will see very low transaction levels next year and a fall in values of as much as 5%.

“Interest rates are likely to remain low over the medium term, keeping tracker mortgages an attractive option for homeowners.

“We will hopefully see a continued modest improvement in the first time buyer market with a greater number of higher loan to value mortgage products and shared equity schemes becoming available. We are also likely to see a continuation of parents opting to help their children onto the property ladder instead of keeping money in the bank, where they are seeing little return on their savings.

“High levels of activity in the buy to let sector will continue to underpin the market next year, with landlords returning in considerable numbers as well as new investors seeking a safe home for their cash that will also generate a decent income. Our research shows that over three quarters of existingUKproperty investors are considering buying additional investment properties in 2012. Rents will continue to grow strongly, in the region of +5% next year, as restricted mortgage lending and poor employment prospects has left a whole generation of potential first time buyers with little prospect of buying a home. Consequently landlords are set to benefit from another year of strong yields, albeit alongside only modest capital growth.”

Stuart Law, Chief Executive of Assetz, comments on the Government’s new Housing Strategy for England announced today:

“It is good to see today’s announcement from the Government offering to underwrite some of the risk of higher loan to value mortgages via an indemnity fund supporting up to 95% loan to value loans. This is exactly the structure we suggested to HM treasury earlier this year and will leverage some risk capital provided by housebuilders to a level where 95% mortgages are possible again.

“We are talking about providing mortgages to high quality buyers who can more than afford monthly mortgage repayments but who are simply struggling to save the much larger deposits now required, so I expect the risk to taxpayer’s cash to be very small.

“The enormous benefits to the wider economy will far outweigh the negligible risk of mortgage defaults, and the announcement of the £400 million investment fund to support development could be the kick start we need to start building our way out of this recession.”