Rent vs. Buy Calculator

How this comparison works

Most rent-versus-buy sums compare rent with the mortgage payment. That is not the comparison, and it is why so many of them favour buying. Against rent you have to set the full cost of owning — mortgage interest, property tax, insurance, maintenance and any service charge — while the principal portion of a payment is saving, not spending.

The other half is the part people leave out entirely. A renter who does not put down a deposit still has that money, and a renter whose monthly housing cost is lower than an owner's has the difference too. This tool invests both, at the return you set, and counts the result on the renting side. Remove that and renting always loses, which is the single most common flaw in a rent-versus-buy calculation.

Why the time horizon decides it

Buying carries heavy one-off costs at both ends — transfer taxes and fees going in, agent commission going out — and they are recovered slowly. That makes how long you stay the dominant variable, ahead of price, rent or even the interest rate.

Below roughly five years the transaction costs usually swamp everything else. Beyond ten, buying usually wins. The interesting cases sit in between, which is exactly where a calculation earns its keep and a rule of thumb does not.

Reading the break-even year

The chart shows the net cost of each path over thirty years, and the break-even marker is the first year at which buying is genuinely cheaper — the same calculation as the headline, run for every horizon, so the verdict and the marker can never disagree.

A break-even beyond your realistic horizon is the clearest signal the tool gives. If it lands at year twelve and you expect to move in five, the answer is not "buy and hope"; it is that renting is cheaper for the life you actually expect to lead.

What moves the answer most

• Years you will stay. Nothing else comes close.
• The gap between rent and the full cost of owning. Where rent is far below that cost, the invested difference compounds and renting strengthens with time rather than weakening.
• The assumed investment return against house price growth. These two fight each other, and the spread between them matters more than either number alone.
• Transaction costs. They differ enormously — under 1% of the price in some markets and over 5% in others — and they are paid in cash on top of the deposit.

What the model does not include

Worth being explicit, because these are real and they cut both ways. It does not price security of tenure, which is worth a great deal where leases are short. It does not price the flexibility a renter keeps, which matters most early in a career. It assumes the renter actually invests the difference, which many people do not — a mortgage is forced saving and that is a genuine advantage of buying for anyone who would otherwise spend it.

It also treats the figures you enter as steady. Real mortgage rates reset, real rents rise unevenly, and real maintenance arrives in lumps.