Rent vs Buy Calculator

Compare the long-term financial outcome of buying versus renting over any time period. Accounts for mortgage payments, house price growth, maintenance, rent increases and deposit investment returns.

Last updated: April 2026

Property & scenario details
Buying costs & assumptions
Rule of thumb: 1–2% of property value per year
Renting comparison
If you rent instead of buying, your deposit earns returns invested elsewhere.
Rent vs Buy comparison
Net position difference
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net wealth position
Rent
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net wealth position
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Rent vs buy: it is more complex than it looks

The rent versus buy decision is one of the most consequential financial choices most people make, and it is routinely oversimplified in both directions. Buying is not always better just because "you are paying yourself" - and renting is not always "throwing money away". The right answer depends on your local market, how long you plan to stay, the opportunity cost of your deposit, and house price growth assumptions over your planning horizon.

The opportunity cost of the deposit

When you buy, your deposit is locked into equity - it is no longer invested and earning a market return. If you rented the same property instead, that deposit could be invested in a diversified portfolio. At 5–7% annual return over 10 years, a £28,000 deposit grows to approximately £46,000–£55,000. This investment return is a real cost of buying that many people overlook when comparing renting and buying.

Transaction costs matter at short time horizons

Buying a property incurs significant one-off costs: stamp duty, solicitor fees, survey, and mortgage arrangement fees - typically 3–5% of the purchase price. Selling incurs estate agent fees (1–3%) and further legal costs. If you sell within 3–5 years, these transaction costs significantly erode the financial advantage of buying, even in a rising market. Renting offers flexibility at zero transaction cost if you need to move.

When buying wins decisively

Buying tends to produce better outcomes than renting over longer time horizons (10+ years), in markets with strong historical house price growth, and when mortgage rates are significantly below the rental yield of the property. In the UK, average house prices have grown at approximately 4–6% per year over the long term, and mortgage costs have historically been lower than rental costs for equivalent properties. Over 20–25 years, the combination of capital growth and reducing mortgage debt typically produces substantially stronger wealth outcomes than renting and investing the difference.

Frequently asked questions

Not necessarily. In some UK markets, particularly outside London and the South East, monthly mortgage payments on a modest deposit can be comparable to or even lower than equivalent rental costs. In London and the South East, renting is typically cheaper in the short term because property prices are very high relative to rents, making the mortgage payment significantly more than the rent. The picture changes with time - as the mortgage reduces and rents rise, buying typically becomes the better position.
House price growth is the single biggest variable in the rent vs buy calculation over longer periods. At 3% annual growth, a £280,000 property becomes approximately £376,000 in 10 years - generating £96,000 in capital growth on a deposit of £28,000. At 5% growth, it reaches £456,000. Even modest house price growth, compounded over a decade, produces very large absolute gains that renting cannot replicate. However, there is no guarantee of house price growth - regional markets vary significantly, and prices can fall in the short term.
If there is genuine uncertainty about whether you will stay for more than 3–5 years, the transaction costs of buying can easily outweigh the benefits. Stamp duty alone on a £280,000 property is £4,000 for a home mover (£0 for a first-time buyer). Estate agent fees on selling add another £4,000–£7,000. These costs require meaningful house price growth just to break even. If your timeline is uncertain, renting preserves flexibility at no penalty, while buying locks you into a market position and a set of transaction costs that need time to overcome.

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