Buy vs Rent Calculator

About Buy vs Rent Calculator

Compare the true total cost of buying a home versus renting over any time period. The calculator accounts for deposit opportunity cost, stamp duty, mortgage interest, maintenance, property appreciation, rent increases, and investment returns to give a fair financial comparison.

How the Comparison Works

The model tracks two people over your chosen time period:

The buyer pays: deposit, stamp duty (SDLT), monthly mortgage payments, and annual maintenance (~1% of property value). They build equity through price appreciation and principal repayment.

The renter pays: monthly rent (increasing annually). They invest the money they would have spent on a deposit and stamp duty into a diversified portfolio, plus any monthly savings when rent is cheaper than the buyer's total outgoings.

At the end, the buyer has a property worth X minus any remaining mortgage. The renter has an investment portfolio. The calculator shows which leaves you better off.

What Tips the Balance

The Hidden Costs of Buying

The purchase price and mortgage payment are just the start. A fair comparison must include:

• Stamp duty: £7,500 on a £350,000 property (standard buyer). Use the stamp duty calculator for exact figures.
• Solicitor/conveyancing: £1,000-2,500
• Survey: £300-1,500 depending on type
• Mortgage arrangement fee: £0-2,000
• Maintenance: Budget 1-2% of property value per year. A £300,000 home costs roughly £3,000-6,000/year to maintain.
• Buildings insurance: £200-500/year
• Opportunity cost: Your deposit could be invested instead. £35,000 at 7% returns grows to about £69,000 in 10 years.
• Selling costs (when you move): Estate agent fees (1-1.5%), solicitor, EPC. On a £350,000 sale: roughly £5,000-7,000.

Total transaction costs of buying and later selling can easily reach £20,000-30,000. This is why short ownership periods often favour renting.

The Rent vs Buy Breakeven

A rough rule: if the annual rent is less than about 3-4% of the purchase price, renting may be better financially (assuming reasonable investment returns on the money not spent buying). If rent exceeds 5% of the purchase price, buying becomes more attractive.

Example: A flat costs £300,000 to buy or £1,200/month (£14,400/year) to rent. Rent as a percentage of price: 14,400 / 300,000 = 4.8%. That is borderline - the time horizon becomes the deciding factor.

London often has low rent-to-price ratios (2-3%) because prices are very high relative to rents. Northern cities often have higher ratios (5-7%), making buying more clearly advantageous.

Non-Financial Factors

Money is not everything. Considerations that do not appear in the calculator:

• Stability: Owners cannot be evicted by a landlord wanting to sell. Families with children often value this security.
• Customisation: Owners can renovate, extend, and personalise. Renters are limited by tenancy agreements.
• Flexibility: Renters can relocate in 1-2 months. Selling a house takes 3-6 months minimum.
• Stress: Homeownership comes with maintenance responsibilities, boiler breakdowns at 2am, and the stress of a large financial commitment.
• Forced savings: Mortgage payments build equity automatically. Renters need discipline to invest the difference consistently.

To check how much you can borrow, use the mortgage affordability calculator. For monthly payment estimates on a specific property, try the mortgage calculator.

All calculations run in your browser. No financial data is sent anywhere.