What this calculator does
Compares the total financial cost of renting versus buying over a chosen period, including equity built, opportunity cost of the deposit, and property price growth. Returns net cost for each path and the break-even year.
The formula
Buying costs over t years: + Deposit + Stamp Duty (SDLT at standard England rates) + Mortgage interest paid (total repayable − principal reductions) + Maintenance allowance (default 1% of property value per year) + Buildings insurance − Equity built (= deposit + capital repaid + property appreciation) Net cost of buying = total outflows − equity at end of period Property appreciated value = purchase_price × (1 + annual_growth)^t Mortgage amortisation uses standard monthly formula for each year. Renting costs over t years: + Total rent paid (monthly rent, inflating at rent_inflation% per year) − Investment gain on deposit (deposit × (1 + investment_return)^t − deposit) Net cost of renting = total rent − investment gain on deposit
Assumptions
- Rent inflates at a constant annual rate entered by the user.
- The investment return on the deposit (the alternative use of the deposit if renting) is constant and entered by the user.
- Property grows at a constant annual rate entered by the user.
- The buying analysis uses a standard repayment mortgage.
- SDLT is calculated at current England standard rates — no first-time buyer relief is assumed (use the first-time buyer calculator separately).
- No transaction costs on selling the property at the end of the comparison period, unless entered by the user.
Data sources
No external regulatory data sources are used for the core comparison. SDLT rates used are current England standard rates — see the Stamp Duty methodology for the source and date. All growth and return assumptions are user-entered; the calculator does not supply default rates.
Limitations
- The result is highly sensitive to the assumed property growth rate and investment return rate — small changes in these assumptions can swing the outcome materially. Treat the output as illustrative rather than predictive.
- Does not model capital gains tax on the property sale, which would apply to a second home or investment property but not to a primary residence.
- Does not model rental voids, periods of unoccupancy, or the costs of moving between rental properties.
- SDLT uses current England rates and does not apply first-time buyer relief, Scotland LBTT, or Wales LTT.
- Does not model remortgaging mid-term — the mortgage rate is assumed constant throughout the comparison period.
Worked example
Inputs: £300,000 property, £30,000 (10%) deposit, 4.5% mortgage rate, 25-year term, 3% property growth per year, £1,200/month rent (2% annual rent inflation), 5% investment return on deposit, 10-year comparison.
Buying over 10 years:
Property value at year 10: £300,000 × (1.03)^10 ≈ £403,176
SDLT (standard rates, England): £5,000
Mortgage interest paid years 1–10: approx £109,000
Maintenance at 1%/yr: approx £30,000
Equity at year 10 (deposit + capital repaid + appreciation):
approx £30,000 + £23,000 capital repaid + £103,176 appreciation = £156,176
Net cost of buying ≈ £5,000 + £109,000 + £30,000 − £156,176 ≈ −£12,176
(negative = the buyer is better off by this amount vs simply spending the money)
Renting over 10 years:
Total rent (£1,200/month inflating at 2%/yr over 10 years): approx £159,000
Investment gain on £30,000 at 5% for 10 years:
£30,000 × (1.05)^10 − £30,000 ≈ £18,867
Net cost of renting: £159,000 − £18,867 ≈ £140,133
In this scenario, buying is significantly cheaper over 10 years.
Results vary materially with different growth and return assumptions.
Changelog
| Date | Change |
|---|---|
| May 2026 | Initial publication |