How the buy or rent calculator works
It compares two versions of your future. In one you buy a home today and sell it when you move on. In the other you rent and invest. Same starting money, same monthly budget. Whoever ends up with more at the end wins.
A guided simulation in 7 steps
The simulation walks you through 7 steps: You, The home, Mortgage, Renovations, Owning & selling, Renting, and Growth & returns. Each step asks a few main questions and lists everything else it counts, pre-filled with typical figures for England. Change any line you know better. After the result, the same 7 steps become tabs where you can fine-tune every assumption and watch the result update.
Where your starting money sits
Cash means new money: whatever buying or renting doesn't spend upfront is invested on day one, using that tax year's ISA allowance; anything above it goes into a taxable account (GIA). Already in an ISA means the money is already sheltered: what isn't spent stays in the ISA tax-free without using new allowance, and the buyer takes out what the purchase needs. With large savings, the ISA option usually helps renting, because more of the renter's money grows tax-free from the start.
Same money in, both ways
The starting money is the larger of what buying needs upfront (deposit, Stamp Duty, fees, furniture, first works) and what renting needs upfront (tenancy deposit, first month's rent). Whatever one side doesn't spend upfront gets invested.
Each month, the budget is the larger of the two outgoings. The cheaper side invests the difference. This keeps the comparison fair: renting doesn't look better just because the renter spends less and saves nothing.
Buying
- A mortgage with an initial fix, then a new fix at the same rate and length again and again (for example every 5 years) until it is paid off, the way most people roll from one fixed deal to the next. A remortgage fee is paid at every new fix. Repayment or interest-only, with optional overpayments.
- Early repayment charges if you sell during a fix. If you keep the home until the mortgage ends, by default no charge is paid at the end (you can switch this off).
- Stamp Duty Land Tax, including first-time buyer relief (England, 2026/27).
- Maintenance, insurance, council tax, utilities and other costs, each rising with its own inflation rate.
- Renovations when you move in and then one every 10 years (years 10, 20 and 30), each paid in cash or with a loan and optionally adding value. Only renovations up to the year you sell count.
- Utilities (gas, electricity and water) as one total, or split into the three.
- At the end the home is sold: estate agent and solicitor fees, any early repayment charge and the remaining loans come off.
Renting
- Rent rises every year. The tenancy deposit (capped at 5 weeks' rent below £50,000 a year) earns a little interest.
- Moving every few years costs money and may need a bigger deposit.
- Tenant insurance, council tax and utilities, each with its own inflation rate.
Investing the difference
- Money goes into a Stocks & Shares ISA first, up to the allowance for each UK tax year (from 6 April), then into a general investment account.
- Dividend tax and capital gains tax on the general account, with the annual allowances, split 50/50 for couples.
- Returns are after investment fees. Three ready-made mixes help you pick a return: shares 7.5%, balanced 6%, bonds & cash 3.5% a year before inflation, based on long-run history 1900–2024 (world shares 5.2% a year above inflation, bonds 1.7%, cash 0.5%; UBS Global Investment Returns Yearbook 2025) plus about 2.5% inflation.
- Optional bed and breakfasting: each tax year, gains in the general account up to the capital gains exempt amount are realised tax-free, which lowers the tax due when you sell at the end.
- A Lifetime ISA (LISA) counts on both sides. A first-time buyer uses it for a home costing up to £450,000. Otherwise, and when renting, it stays invested and is valued net of the 25% withdrawal charge, or at full value if you keep it until 60.
The result
Buy is what you'd have after selling: home value minus selling costs, loans and any early repayment charge, plus investments. Rent is investments plus the tenancy deposit. Buy, never sold (full model) skips selling costs. The break-even year is the first year buying comes out ahead.
Starting values
| Input | Starting value | Based on |
|---|---|---|
| House price | £290,000 | England average, ONS, June 2026 (£293,000) |
| Rent | £1,450 / month | England average private rent, ONS, July 2026 (£1,451) |
| Initial fixed rate | 5.9% for 2 years | Average 2-year fixed rate, Moneyfacts, October 2026 (5.96%) |
| Each new fix | 5.9% every 5 years | Assumption: the same rate as today's 2-year average, rolled until the mortgage is repaid |
| Council tax (owner) | £2,390 / year | Average Band D, England 2026/27 (£2,392) |
| Upfront extras | £10,000 · £10,000 | Furniture and initial renovation, assumptions |
| Deposit · stay · return | 15% · 10 yrs · 6% | Typical first-time buyer deposit; balanced investor |
Accuracy
The calculator is a line-by-line port of a spreadsheet model and is tested against it. On seven reference cases the results match to within a fraction of a penny.
Limitations
- England only. Stamp Duty and council tax work differently in Scotland, Wales and Northern Ireland.
- Nominal pounds, no inflation-adjusted view yet.
- Growth and returns are constant. Real markets move around. Excel Pro adds scenarios, sensitivity tables and Monte Carlo simulation for that.
- Not covered: leasehold service charges and ground rent (use "other costs"), Shared Ownership, buy-to-let.
- Tax tables and typical fees are a snapshot. Check GOV.UK and HMRC for current figures.