Whether renting or buying is better depends mostly on how long you stay, then on what you assume prices, rents and savings will do. In the worked example below, buying and renting finish within £325 of each other after five years, renting is ahead if you leave sooner, and buying is ahead if you stay longer.
None of that rests on a house-price forecast. Here is how the comparison is built, which costs matter on each side, and a calculator to rerun it with your own figures.
What decides whether renting or buying is better?
Five things move the answer, roughly in this order:
- Time in the home. Buying costs a lot at the start and again when you sell. The longer you stay, the longer those costs are spread.
- Mortgage interest against rent. Interest is the price of borrowing the money. Rent is the price of not owning.
- Costs only owners pay. Repairs, maintenance, buildings insurance and any service charge or ground rent.
- What your money does elsewhere. A buyer’s deposit is tied up in the property. A renter keeps it and can save or invest it.
- Where prices and rents go. The least predictable item, and the one most worth testing in both directions.
What does each option cost, and what do you keep?
| Renting | Buying | |
|---|---|---|
| Monthly cost | Rent, plus contents insurance | Mortgage payment, plus buildings insurance and upkeep |
| Cash needed at the start | A tenancy deposit (refundable if nothing is deducted) and moving costs | Deposit, legal and survey fees, mortgage fees, stamp duty |
| Costs you never get back | All the rent and the moving costs | Mortgage interest, upkeep, insurance, buying and selling costs |
| What you keep at the end | Whatever you saved or invested instead | The sale price, minus the mortgage still owed and the costs of selling |
| What can change | Rent can rise at renewal | Property value can rise or fall, and the rate can reset when a deal ends |
The mortgage payment is not a cost in full. Part of it repays the loan and becomes your equity; only the interest is spent. That is the part most “rent is dead money” arguments leave out, and our guide to how a mortgage repayment is calculated shows how the split between the two shifts over the years.
Which buying costs do you never get back?
Five, and a fair comparison counts them all:
- Mortgage interest. On a £225,000 loan at 5% over 25 years, £53,225 of the first five years of payments is interest.
- Stamp duty and fees. Stamp Duty Land Tax in England and Northern Ireland, plus legal, survey and mortgage fees. The stamp duty guide for first-time buyers has the bands.
- Upkeep and insurance. Maintenance and buildings insurance; for a flat, service charge and ground rent too.
- Moving costs. These apply on both sides.
- Selling costs. Agent fees, legal fees and anything else you pay to sell.
A worked example: a £250,000 home over five years
The figures below are the rent vs buy calculator’s own starting example. They are assumptions, not predictions: a £250,000 home, a £25,000 deposit, a 5% mortgage over 25 years, £1,200 monthly rent, and property value, rent and investment return all held at 0%. The 0% settings are a deliberate no-growth baseline, so nothing in the result comes from prices rising.
The buyer pays £1,495.33 a month: a £1,315.33 mortgage payment, £30 of home insurance and £150 of maintenance. The renter pays £1,220.00: £1,200 rent and £20 of insurance. Buying also needs £4,000 of one-off costs (£2,000 legal and survey, £1,000 moving, £1,000 mortgage fee), and selling costs 2% of the price plus £1,000.
Here is everything that is gone for good after five years:
| Cost you never get back | Renting | Buying |
|---|---|---|
| Rent and insurance | £73,200 | |
| Mortgage interest | £53,225 | |
| Home insurance and maintenance | £10,800 | |
| Setup, legal and mortgage fees | £500 | £4,000 |
| Selling costs | £6,000 | |
| Total | £73,700 | £74,025 |
Almost identical. The £325 gap is exactly the difference in the final result. Buying costs more per month, but that cost is partly offset because £25,695 of mortgage payments repaid the loan.
Then count what each side keeps:
- The buyer sells for £250,000, repays the £199,305 still owed, pays £6,000 of selling costs and is left with £44,695.
- The renter keeps the £29,000 that would otherwise have gone on the deposit and buying costs. After £500 of setup, they start with £28,500 and save the £275.33 monthly gap between the two options. After five years that is £45,020.
Renting is £325 ahead, which the calculator labels “Similar”. With a result that close, flexibility, security and the way you want to live should count for more than the maths.
How long do you need to stay for buying to win?
The same example, with only the time in the home changed:
| Time in the home | Result with no growth assumed |
|---|---|
| 2 years | Renting ahead by £6,592 |
| 3 years | Renting ahead by £4,770 |
| 5 years | Renting ahead by £325 |
| 7 years | Buying ahead by £5,279 |
| 10 years | Buying ahead by £16,131 |
| 15 years | Buying ahead by £41,930 |
The calculator reports a stable break-even point: the month buying moves ahead and then stays ahead for twelve consecutive months. Here that is month 62, just over five years in. A brief lead that disappears again does not count.
Two things sit behind the pattern. Each year adds principal repaid, which grows the buyer’s share of the home. And the one-off costs, which hit hardest on a short stay, are spread over more months.
Why does the renter’s money matter so much?
Because a fair comparison has to ask what each side would have done with the same cash. A buyer’s deposit and fees go into the property. If the comparison let the renter spend that money instead of keeping it, renting would look worse than it should; if it ignored the money, buying would look better than it should.
The calculator treats both sides alike. By default, the renter keeps the deposit and the non-recoverable buying costs (£29,000 here), and whichever side has the lower monthly cost saves the difference. Both pots grow at the same investment-return assumption. Raise that return by two percentage points and the five-year result moves from £325 to £4,123 in renting’s favour.
The calculator’s sensitivity table shows how far the same example moves when a single assumption changes: a property value falling 2% a year leaves renting £23,864 ahead after five years, and one rising 2% a year leaves buying £25,175 ahead. Those figures show how sensitive the answer is; they say nothing about what will happen. Pick values you can defend for your area, then test the range either side.
Try it with your own figures
The calculator below opens with the example above: £250,000, a £25,000 deposit, 5% over 25 years, £1,200 rent and a five-year stay. Change the time in the home first, then rent, rate and deposit, and watch the result and break-even point move.
Your rent vs buy comparison
Based on a 5-year comparison beginning January 2026. Results are an illustration using the costs and assumptions you entered.
Under the costs and assumptions you entered, the modelled buying and renting positions are similar after 5 years. With a result this close, lifestyle, flexibility and risk may matter more than the financial estimate alone.
- Property value, rent and investment return are all set to 0% — this is a deliberate no-growth baseline, not a forecast.
Upfront and monthly costs
Mortgage principal repaid becomes equity rather than being purely an unrecoverable cost — see the buyer-equity detail below.
| Metric | Buying | Renting |
|---|---|---|
| Modelled upfront cash at start | £29,000 | £500 |
| First-month housing cost | £1,495.33 | £1,220.00 |
| First-year total cash outflow | £17,944 | £14,640 |
| Average monthly cash cost over horizon | £1,495.33 | £1,220.00 |
| Total cash outflow over horizon | £89,720 | £73,200 |
Buyer-equity detail
| Starting property value | £250,000 |
|---|---|
| Estimated property value at horizon | £250,000 |
| Mortgage balance at sale | £199,305 |
| Estimated selling costs | £6,000 |
| Net sale proceeds | £44,695 |
| Modelled buyer savings from lower monthly costs | £0 |
| Estimated buyer end position | £44,695 |
Renter-investment detail
| Starting cash retained instead of buying | £29,000 |
|---|---|
| Renter setup costs (immediate outflow) | £500 |
| Value under assumed investment return | £28,500 |
| Modelled monthly cash-flow savings, with their own growth | £16,520 |
| Estimated renter end position | £45,020 |
Mortgage breakdown
| Purchase price | £250,000 |
|---|---|
| Deposit | £25,000 |
| Loan amount | £225,000 |
| Annual interest rate | 5% |
| Mortgage term | 25 years |
| Monthly payment | £1,315.33 |
| Balance at horizon | £199,305 |
| Interest paid within horizon | £53,225 |
| Principal repaid within horizon | £25,695 |
Estimated financial position over time
The buyer position moves from £19,000 at purchase to £44,695 at 5 years; the renter position moves from £28,500 to £45,020 over the same period. No stable buying break-even point appears within the horizon.
Year-by-year figures for the same comparison, including the buy-minus-rent difference at each year end.
| Year | Rent paid | Owner outflow | Property value | Mortgage balance | Buy position | Rent position | Difference |
|---|---|---|---|---|---|---|---|
| 1 | £14,640 | £17,944 | £250,000 | £220,361 | £23,639 | £31,804 | −£8,165 |
| 2 | £14,640 | £17,944 | £250,000 | £215,484 | £28,516 | £35,108 | −£6,592 |
| 3 | £14,640 | £17,944 | £250,000 | £210,358 | £33,642 | £38,412 | −£4,770 |
| 4 | £14,640 | £17,944 | £250,000 | £204,970 | £39,030 | £41,716 | −£2,685 |
| 5 | £14,640 | £17,944 | £250,000 | £199,305 | £44,695 | £45,020 | −£325 |
Illustrative sensitivity tests, not forecasts. Each row changes one assumption from your base figures and holds everything else the same.
| Scenario | Property change | Rent growth | Investment return | End difference (buy − rent) |
|---|---|---|---|---|
| Base assumptions | 0% | 0% | 0% | −£325 |
| Property change -2pts | -2% | 0% | 0% | −£23,864 |
| Property change +2pts | 2% | 0% | 0% | +£25,175 |
| Rent growth -1pt | 0% | -1% | 0% | −£2,075 |
| Rent growth +1pt | 0% | 1% | 0% | +£1,465 |
| Investment return +2pts | 0% | 0% | 2% | −£4,123 |
- Time horizon
- 5 years from January 2026
- Monthly rent today
- £1,200.00
- Purchase price
- £250,000
- Deposit
- £25,000
- Loan amount
- £225,000
- Estimated end position if buying
- £44,695
- Estimated end position if renting
- £45,020
- Result
- Similar (£325)
- Stable break-even point
- Not within 5 years
- Note
- This is an illustration built from the figures you entered, not a prediction or personal financial advice. Version 1 excludes mortgage-interest tax relief, capital-gains tax, property-tax deductions, investment tax and other tax effects.
What does the comparison leave out?
It is an illustration, not a quote or advice, and it does not model everything:
- Stamp duty is not added for you. Enter it as a one-off buying cost. On GOV.UK’s current residential bands, a standard purchase at £250,000 pays 2% on the part above £125,000, which is £2,500, and eligible first-time buyers pay nothing up to £300,000. Adding £2,500 to the example above puts renting £2,825 ahead at five years, and buying £2,779 ahead at seven. The UK stamp duty calculator works out the figure, and the glossary explains Stamp Duty Land Tax.
- The rate is fixed for the whole term. Most UK deals last two to five years and then reset, so your payment will probably change.
- No tax effects. It leaves out capital gains tax, mortgage-interest relief and tax on investment returns.
- No lifestyle. Security of tenure, freedom to move, a garden and the stress of repairs have no price in the model.
- No lending decision. Whether a lender will give you the loan is a separate question; the UK mortgage affordability calculator gives an illustrative borrowing range.
What to do next
Run the rent vs buy calculator with the rent you pay today, the price and deposit you are considering, and a stay you can honestly commit to. Then change the time in the home by a few years each way, and rerun it with property growth and investment return a couple of points either side of your assumption. If the answer flips inside that range, the numbers are not deciding it for you.
For the monthly payment on its own, use the mortgage repayment calculator. Check any decision against your lender’s illustration and, for something this large, with a qualified adviser.
Frequently asked questions
Is it cheaper to rent or buy?
How long do you need to stay in a home for buying to make sense?
Is rent dead money?
Should I include stamp duty when comparing renting and buying?
Source: GOV.UK: Stamp Duty Land Tax residential property rates.
Keep reading
How Much Can I Borrow for a Mortgage in the UK?
Two tests set your borrowing limit: a multiple of your income and a payment check at a higher rate. A worked £60,000 example shows which one bites, and why.
How Is Stamp Duty Calculated for First-Time Buyers?
First-time buyers pay no stamp duty up to £300,000 and 5% on the slice up to £500,000 — then lose the relief entirely. The bands, the cliff edge and worked examples.
How Is a Mortgage Repayment Calculated?
The amortisation formula behind every repayment mortgage, worked through for a £200,000 loan — and why the balance barely moves in the first few years.