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Owning your home makes you wealthier than renting

Owning a home will make you £326,000 wealthier over a 30-year period than renting, before potential house price growth is even considered, a report has suggested.

The Equity Release Council, a trade body, found that nearly one in three homeowners saw their mortgage as an investment in their future.

Nearly half of homeowners with a mortgage also agreed they were able to save more because their loan was cheaper than renting, thanks to unprecedented low interest rates. About 40 per cent added that they believed having a mortgage in later life was becoming more acceptable and 57 per cent said that they were looking at ways to release equity from their properties.

The report Home advantage: intergenerational perspectives on property wealth in later life examined trends that have altered the financial landscape for pensions and home ownership over the past three decades. The survey covered 5,000 UK adults questioned in May 2021. It compared the cost of renting privately with paying a mortgage on the average first-time buyer. It assumed that average rents rise by 2 per cent each year and that the home-owner takes a 95 per cent loan-to-value mortgage on a £220,000 home. It takes account of other costs of owning, such as maintenance.

Owning a home is expected to become more critical to families’ financial security and wellbeing in later life, but the report also warned of lifelong inequality for those — generally younger people — unable to buy.

David Burrowes, the Equity Release Council chairman, said: “For those who manage to buy their own home during their working lives, the extra confidence and flexibility this provides will be even more critical to their financial wellbeing than it is today.”



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