How the comparison works
The calculator follows two versions of you for the same number of years.
If you buy: you pay the deposit, stamp duty and legal costs upfront. Each month you pay the mortgage plus maintenance and any service charge. Your wealth at any point is your home equity: the property value, minus the mortgage still owed, minus the cost of selling.
If you rent: you invest the deposit and buying costs instead, and pay rent each month. Your wealth is your investment pot.
Both versions spend the same amount each month. Whoever has the lower monthly cost (rent, or mortgage plus upkeep) invests the difference. That keeps the comparison fair: you’re comparing what each path leaves you with, not just which bill is smaller.
Worked example
A £300,000 home with a £30,000 deposit, a 5-year fixed rate around 5%, versus renting a similar home for £1,400 a month. We assume 3% a year for house prices, 3% for rent increases and 5% for investments:
| After 10 years | Wealth if buying | Wealth if renting |
|---|---|---|
| House prices +3% a year | £199,229 | £96,782 |
| House prices flat | £98,061 | £92,114 |
The answer swings heavily on house price growth. Buying is a leveraged bet: a 3% rise on a £300,000 home is £9,000 a year of gain on a £30,000 deposit.
The assumptions that matter most
- House price growth. The biggest lever. Try 0%, 2% and 4%.
- Investment return. Higher returns favour renting. Use a realistic after-fee figure.
- How long you stay. Upfront and selling costs hurt buyers most over short periods.
- Mortgage rate. Higher rates mean more interest and less equity built early on.
- Maintenance. Budget around 1% of the property value a year, more for older homes.
- Rent increases. Private rents have recently risen faster than general inflation.
Every assumption is an input, so you can test pessimistic and optimistic scenarios.
What the model leaves out
To keep it understandable, the calculator doesn’t model:
- Remortgaging. The rate is constant for the whole period.
- Tax on investments. We assume the renter invests in an ISA, so returns are tax-free.
- Insurance. Buildings insurance (owner) and contents insurance (both) are similar enough to roughly cancel out.
- Non-financial factors, such as security of tenure, freedom to decorate, flexibility to move, and the hassle of maintenance.
Using the result
Treat the result as a way to understand the trade-offs, not a prediction. If buying only wins under optimistic assumptions, or only after 15 years when you expect to move in five, renting may be the more robust choice. Check what you can borrow with the affordability calculator and your upfront tax with the stamp duty calculator.
Frequently asked questions
Is it cheaper to rent or buy in the UK?
It depends on house price growth, your mortgage rate, how long you stay and what you'd earn investing your deposit instead. Buying tends to win the longer you stay, because the upfront costs of buying and selling are spread over more years.
How long do I need to stay for buying to make sense?
Typically several years. Stamp duty, legal fees and selling costs can take years of equity growth to recover. The calculator's crossover year shows exactly when buying pulls ahead under your assumptions.
Why does the renter invest money?
To compare fairly. The buyer puts a deposit and fees into a home; the renter could invest that same money. And each month, whichever option is cheaper leaves money to invest. Without this, renting would always look worse.
What house price growth should I assume?
There's no right answer. UK house prices have averaged roughly 3–4% a year over long periods, with long flat or falling spells. Try a range — 0%, 2% and 4% — to see how sensitive the result is.
Does the calculator include mortgage fees?
Add product and arrangement fees to Legal & survey under Ownership costs. Stamp duty is calculated automatically.
What if I plan to remortgage?
The model uses one rate for the whole period. Try a higher rate to test what happens after your fix ends.
Why does buying win so quickly in some scenarios?
Leverage. With a 10% deposit, house price growth applies to the whole property value, so even modest growth produces large gains on your deposit.
Sources
Results are estimates for education and planning, not financial advice. They depend on the figures you enter and the assumptions shown above.