56% of First-Time Buyers Now Pay More on Their Mortgage Than They Did in Rent

For most first-time buyers, owning a home remains the objective. Moving from renting to ownership has always required a deposit, legal fees and mortgage finance. During much of the low-interest-rate period, buyers who cleared those barriers could expect their monthly mortgage payment to be lower than the rent they had been paying.

That advantage has narrowed sharply. For a growing share, the monthly cost of ownership now exceeds the rent they previously paid.

For households deciding whether to buy or continue renting, the difference affects the money left after housing costs for saving, childcare, transport, repairs and everyday spending. It can delay a purchase, limit the type of home a buyer can afford or keep a household in the rental market while it builds a larger deposit.

Hamptons identified a clear divide between buyers whose mortgage costs more than their previous rent and those whose mortgage costs less.

The buyers facing the higher monthly payment had an average loan-to-value ratio of 91%, equivalent to a 9% deposit. Those whose mortgage payment was lower than their previous rent had an average loan-to-value ratio of 83%, equivalent to a 17% deposit.

The difference matters. A larger deposit reduces the amount borrowed, opens access to a wider range of mortgage products and can make the monthly cost of ownership more manageable. It also gives a buyer more flexibility when competing for a mainstream home.

Landlords will see the effect most clearly in markets where first-time buyers and tenants compete for the same practical houses and well-located apartments. A household unable to build a larger deposit or support the mortgage payment may remain in rented accommodation for longer. A buyer with more equity may still be able to move quickly.

The position will differ by location. Higher-value markets require larger loans even for modest homes. In more affordable areas, the gap between rent and mortgage can be narrower, particularly for buyers with larger deposits.

Hamptons reported that the average rent on a newly let home in Great Britain reached £1,433 a month in September, 2.7% higher than a year earlier. It was the fastest annual increase since November 2024.

The figures show continued pressure in the market for homes being advertised today. They do not provide a blanket justification for rent increases.

A household remaining in rented accommodation does not have unlimited spending power. Local wages, household budgets, competing rental stock and the quality of the property will determine the rent a landlord can achieve.

Investors need evidence from the immediate market. Comparable homes should be letting at the proposed rent, within a reasonable period and without repeated reductions or incentives. That evidence matters more than a national average.

Read SmartLandlord’s analysis of UK rental growth in 2026

The first-time-buyer market is an important part of a landlord’s exit strategy.

A property that appeals only to investors relies on another landlord accepting the same rental income, finance costs and ownership liabilities at resale. A mainstream home with genuine owner-occupier appeal has a wider pool of potential buyers.

The Hamptons data reinforces the importance of price. A property must be affordable for the person likely to own it next, not simply for the investor buying it today.

SmartLandlord focuses on the most liquid and in-demand segments of the residential market, where demand extends beyond landlords to first-time buyers, families and owner-occupiers. That broader appeal supports a more credible resale market throughout ownership.

Hamptons October 2026 Lettings Index
The Guardian report on the Hamptons research