Thursday 20 October 2016

'Rent-trap' tenants pay out €2,400 more than homebuyers

Shortage of homes for sale means its cheaper to buy than to rent

Published 21/09/2015 | 02:30

Many of those renting have been left unable to buy a property
Many of those renting have been left unable to buy a property

Trapped renters are paying out an average of €2,400 a year more to landlords than they would be charged in mortgage repayments if they bought the same house.

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It is now cheaper to buy a family home than to rent everywhere in Ireland except parts of Dublin.

However, the shortage of family homes for sale means that many 'reluctant renters' will be stuck handing over hefty rents for the foreseeable future.

A survey of 54 areas around the country has found that in 80pc of places renting was more expensive than buying in the second quarter of the year.

Only in areas of south Dublin and the city centre would the loan repayments on a typical three-bedroom house cost more than renting the same property.

The saving in the Leinster region, excluding Dublin, averages €200 a month, based on a variable rate mortgage with an interest rate of 4.3pc.

In Munster, the savings add up to €185 a month, while in Connacht they are €224 and in Ulster they are €213.

It comes as experts predict that thousands of families with tracker mortgages are set to benefit from record low interest rates for at least three more years.

But existing homeowners on variable rates will continue to suffer from a 'mortgage apartheid', which sees them paying multiples more for their mortgages.

New buyers are being offered cheaper deals, as banks try to lure in profitable first-time buyers, mortgage experts said.

The various rates being charged to different borrowers have effectively created a three-tier mortgage market.

Juliet Tennent, an economist at Goodbody Stockbrokers, said it would be at least 2018 before the ECB raises rates.

This was because economic growth is sluggish in the eurozone and unemployment is still high.

Irish Independent

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