Buy vs. Rent Calculator

For decades, buying a home was seen as the obvious path to wealth. But with house price growth flattening, the property ladder that earlier generations relied on no longer exists in the same way. Buying isn't automatically the wise investment it once was, and renting while investing the difference can sometimes leave you better off. This calculator lets you compare the two honestly, using your real numbers. It is tailored to the UK market, with stamp duty, ISAs, and typical UK costs built in.

Property

Down payment (%)

Mortgage term (years)

Home appreciation (%/yr)

Other purchase costs (£)

Maintenance (%/yr of value)

Initial maintenance (%/yr, blank = same)

Initial maintenance years

Selling cost (%)

Buildings insurance (£/yr)

Renting & Investments

Investment return (%/yr)

Rent appreciation (%/yr)

Tax on returns outside ISA (%)

ISA allowance (£/yr)

Inflation (%)

Choosing an investment return: Tune this to match your risk appetite. Typical long-run annualised returns: cash savings accounts ~4–5%, bonds ~3–5%, global index funds ~7–10% (but volatile year to year). A sensible approach is to diversify across risk profiles. The default of 5.2% reflects a balanced mix of equities and safer assets. Try different values to see how the result changes.

Pensions (not modelled): This calculator does not model pension contributions, but they can significantly boost the rent-and-invest strategy. When you contribute to a pension, the government adds tax relief: a basic-rate taxpayer putting in £800 gets topped up to £1,000 (25% instant bonus); a higher-rate taxpayer putting in £600 effectively gets £1,000 (67% bonus). Growth inside the pension is also tax-free. The tradeoff is that the money is locked until age 57 (rising to 58 in 2028). If you are renting and investing your surplus, directing some of it into a pension (especially via salary sacrifice, which also saves National Insurance) could make the renting case even stronger than shown here. As a rough guide, a 40% taxpayer investing £500/mo via pension rather than a taxable account could be ahead by £50,000+ over 15 years from tax relief alone.