“Rent is dead money” is one of the most repeated lines in British personal finance. It’s only half the story. Mortgage interest, maintenance, stamp duty and selling costs are dead money too. The real question is which path leaves you wealthier, and that depends almost entirely on a handful of assumptions.
A fair comparison
A meaningful rent-vs-buy comparison has to give both paths the same money:
- The buyer spends a deposit plus stamp duty and fees. The renter invests that same sum.
- Each month, whichever path is cheaper invests the difference.
Without this, buying always looks better, because the renter’s spare cash disappears from the calculation. Our rent vs buy calculator builds this in.
The four assumptions that matter most
1. House price growth
Buying is a leveraged investment. With a 10% deposit, a 3% rise in the house price is a 30% return on your deposit, before costs. Small changes in this assumption swing the answer more than anything else.
2. Investment returns
The renter’s pot grows at whatever you assume. A diversified global equity fund has historically returned more than cash but with large swings. Use an after-fee, realistic figure, and remember it’s not guaranteed.
3. Time horizon
Buying has big one-off costs at both ends: stamp duty and legal fees when you buy, estate agent and legal fees when you sell. Over three years they often wipe out any gain. Over fifteen, they’re spread thin.
4. Mortgage rate vs rent
When mortgage rates are high relative to rents, owning costs more each month, so the renter invests more. That’s been the case since 2023 in many parts of the UK.
How the answer changes
A £300,000 home with a £30,000 deposit versus £1,400 a month rent, after 10 years:
| Scenario | Buy | Rent & invest | Buying ahead from |
|---|---|---|---|
| House prices 0%, investments 5% | £98,061 | £92,114 | Year 9 |
| House prices 2%, investments 5% | £162,315 | £94,986 | Year 3 |
| House prices 4%, investments 5% | £239,514 | £98,673 | Year 2 |
| House prices 3%, investments 8% | £199,229 | £124,074 | Year 2 |
Things a spreadsheet can’t capture
- Security. Owning means no landlord can end your tenancy. The Renters’ Rights reforms improve tenant security but don’t remove it.
- Flexibility. Renting makes it far easier to move for work or family.
- Forced saving. Mortgage payments build equity automatically. A renter must actually invest the difference.
- Risk concentration. A home is a single, illiquid asset in one location.
- Maintenance hassle, and the freedom to make a place your own.
How to use the calculator honestly
- Start with realistic central assumptions for your area.
- Run a pessimistic case: lower house price growth, higher rates.
- Ask: does buying only win in the optimistic case, or over a longer period than I expect to stay?
If buying wins across a range of reasonable assumptions and time horizons, it’s probably right for you. If it only wins when everything goes well, renting a little longer while you build your deposit may be the more robust choice.
Check what you can borrow with the affordability calculator, and the upfront tax with the stamp duty calculator.
Common questions
Is rent really dead money?
No more than mortgage interest, maintenance and stamp duty are. Both paths have unrecoverable costs. The question is which leaves you wealthier.
How long should I stay to make buying worth it?
Often five years or more, depending on prices and rates. See your crossover year in the rent vs buy calculator.
What investment return should I assume?
A realistic after-fee figure for how you’d actually invest. Cash ISAs pay less than shares but don’t fall in value.
Should I include stamp duty?
Yes. It’s a big upfront cost. The calculator includes it using the stamp duty calculator’s rules.
This guide is general information, not financial or tax advice.