Rent vs buy calculator
Buying carries large one-off costs at both ends. Transfer tax, legal fees, agent commission on the way out, that only get amortised by staying put. That is why the break-even point is usually expressed in years rather than in price: below roughly five years, renting almost always wins; past ten, buying almost always does. The interesting cases are the ones in between, which is where the assumptions in this calculator do the most work.
Highly assumption-dependent. Purchase and sale costs are not modelled, tax treatment differs by country, and the answer swings sharply on price growth, which nobody can forecast. Treat it as a way to test assumptions, not as an answer.
Buying beats renting once the equity built and the price growth outweigh the interest, running costs and transaction fees. The break-even is usually five to ten years. Below that, the upfront costs of buying rarely get recovered.
How to compare renting and buying
Price growth is the assumption that dominates and the one nobody can know. At 3% a year the numbers usually favour buying past about seven years; at 0% they often do not, even after a decade. It is worth running the calculation at several growth rates rather than one, because a conclusion that only holds at an optimistic assumption is not a conclusion. The other factor no calculator captures is flexibility: renting can be ended in a month, while selling takes months and costs several per cent.
Questions
It depends almost entirely on how long you stay. Under five years renting usually wins; past ten, buying usually does.
Run it at several rates including zero. A conclusion that only holds at 5% growth is not a safe one.
Maintenance, property tax, buildings insurance and service charges: commonly 1 to 1.5% of value a year.
No. Add two to five per cent for purchase and another two to three for sale — they push the break-even out further.
No more than paying mortgage interest is. In the early years of a mortgage, most of the payment is interest rather than equity.