Buy vs Rent Decision Calculator
Calculate the true financial comparison between buying and renting a property over your planned time horizon, including all costs and opportunity cost.
Buy vs Rent Guide
The True Cost of Buying
Costs of buying that people forget: stamp duty (0% up to £250k, 5% £250-925k, 10% above — first time buyers get relief). Solicitor/conveyancer: £1,500-3,000. Survey: £400-1,500. Mortgage arrangement fee: £0-2,000. Moving costs: £500-2,000. Ongoing: mortgage interest (the cost of borrowing — not building equity). Service charges and ground rent (leasehold). Buildings insurance. Maintenance (budgt 1-2% of property value per year). Estate agent fees when selling (1-3%). The part of your mortgage pa
The Opportunity Cost of the Deposit
A £35,000 deposit is capital that could otherwise be invested. Opportunity cost: what could that money earn elsewhere? S&P 500 historical real return: approximately 7% per year. At 7% for 10 years: £35,000 grows to £68,861. This 'lost' investment return is a real cost of buying. The buy vs rent calculation is essentially: is house price appreciation + rental savings > investment return on deposit + buying transaction costs? Short time horizon: usually rents wins (high transaction costs of buying
When Buying Makes Sense
Buying advantages: builds equity (a form of forced saving). Protection from rent increases. Freedom to renovate. Stability and security for families. Inflation hedge (mortgage payments fixed in nominal terms). Renting advantages: flexibility (move for job, lifestyle). No maintenance burden. Capital in deposits can be invested. In rapidly falling markets: potentially better. The UK housing market bias: the UK has unusually strong cultural preference for ownership. In Germany and Switzerland: majo
Regional Variation
The buy-vs-rent financial case varies dramatically by UK region: London and South East: very high price-to-rent ratios (buying is expensive relative to renting). Opportunity cost of deposit is huge. Requires very long holding periods to justify buying on pure financial grounds. North England, Scotland, Wales: lower price-to-rent ratios. Buying more often financially superior even at shorter time horizons. Rule of thumb: price-to-annual-rent ratio of 15-20: buying roughly equivalent to renting. A
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