The millionaire property divide: Average Kent buyers are up to £1.1m better off than renting privately

Tenants in Kent would be better off by up to £1.1m on average over 25 years if they bought instead of rented a typical property, according to research by Countryside.

Researchers compared the lifetime gain or loss of someone renting a property in Kent’s 13 local authorities to the lifetime gain or loss of buying an average home in the same 13 districts.

Because buyers will own an asset once they have paid off their mortgage, this is creating a remarkable divide between buyers and renters, leading to a property “underclass” whose wealth will be substantially less than those buying over a 25-year period.

Tenants in Sevenoaks, which is one of the most expensive places to rent in Kent with average property rental costs of £1,397, benefited the most by buying a home – a staggering £1,111,618 over 25 years.

Tenants in Gravesham paying average rents of £940, would be £745,315 better off over the same period. Tenants renting similar homes in Tunbridge Wells, and Medway would be better off respectively by £ 904,500 and £ 605,136 by buying a home.

The following table shows the lifetime difference between buying and renting for the 13 local authorities/ unitary local authorities in Kent:

District Monthly rent (initial) Monthly Mortgage cost Lifetime gain/ loss from renting Lifetime gain/ loss from buying Lifetime difference between renting/ buying
Ashford  £ 706  £ 1,019 -£ 332,660  £ 305,698  £ 638,358
Canterbury  £ 882  £ 1,032 -£ 415,590  £ 309,476  £ 725,066
Dartford  £ 940  £ 1,094 -£ 442,919  £ 328,323  £ 771,242
Dover  £ 611  £ 834 -£ 287,897  £ 250,695  £ 538,592
Gravesham  £ 940  £ 1,008 -£ 442,919  £ 302,396  £ 745,315
Maidstone  £ 817  £ 1,013 -£ 384,962  £ 304,230  £ 689,192
Sevenoaks  £ 1,397  £ 1,518 -£ 658,253  £ 453,365  £ 1,111,618
Shepway  £ 607  £ 858 -£ 286,013  £ 258,314  £ 544,326
Swale  £ 723  £ 857 -£ 340,671  £ 257,599  £ 598,270
Thanet  £ 636  £ 798 -£ 299,677  £  239,954  £ 539,631
Tonbridge & Malling  £ 1,036  £ 1,247 -£ 488,153  £  372,929  £ 861,082
Tunbridge Wells  £ 1,063  £ 1,350 -£ 500,875  £  403,624  £ 904,500
Medway UA  £ 740  £ 853 -£ 348,681  £  256,455  £ 605,136

Countryside calculated the average rents for each district using figures from the Government’s Valuation Office Agency and modelled how they are likely to increase in line with projected house price rises; it then modelled current and projected mortgage rates over a 25-year period using 25-year swap rates and current MFI bank margins. It used current house prices from Land Registry and modelled potential house price rises and capital gains using projections from the Office of Budgetary Responsibility for the next six years and a conservative long-term house price annual growth rate of 3.7%. 

 

Iain McPherson, Managing Director of New Homes and Communities South, at Countryside, said:

“The difference between renting and buying is creating a property gulf in Kent. Even using conservative assumptions on house growth, in most areas the buying is a smart money move.

“Understandably, a stumbling block for some tenants is saving up for the deposit. But, with stamp duty relief and help-to-buy available, this has made buying a home far easier for first-time-buyers. Nationally, first-time-buyer purchases have now reached a ten-year high.”

For those interested in buying a home in the area, Countryside is building a new community of homes at Herschel Place, in Hawkhurst, comprising 67, 2, 3, 4 and 5-bedroom, terraced, semi-detached and detached houses. All of this a short walk of Hawkhurst high street. A quintessential English village, Hawkhurst has independent shops, a supermarket, post office and country pub.

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