Property value
Vₜ = purchase price × (1 + property change)^tThe property-price assumption may be positive or negative.
Buy or Rent? · Methodology
How the calculation works
Compare household net wealth under matched buying and renting scenarios over a user-selected horizon.
Return to calculatorIncluded
- Mortgage amortisation
- Deposit and transaction costs
- Maintenance, service charges and selling costs
- Rent and property-price changes
- Matched starting capital and monthly cost differences
Outside this method
- A recommendation to buy or rent
- Affordability or mortgage eligibility
- The personal value of security and flexibility
- Automatic tax relief and surcharge eligibility
- Renovation, moving and insurance costs unless entered
Calculation
Core formulas
Buying wealth
Sale value − selling costs − mortgage balance + buyer investmentsThe model assumes a hypothetical sale at the horizon.
Renting wealth
Invested starting capital + invested monthly differencesThe renter begins with the deposit, tax and buying costs that were not spent.
Timing convention
When cash flows occur
The model compares monthly housing cash flows, invests the saving available to the cheaper option and reports annual net-wealth positions after a hypothetical sale.
Limitations
What the result cannot establish
- Small assumption changes can move the crossover substantially.
- Comparable homes may still differ in quality or location.
- Mortgage rates after a product period may change.
- Tax bands, reliefs and surcharges must be verified with the relevant authority.
Reference tests
Numerical checks
| Case | Inputs | Expected result |
|---|---|---|
| Matched capital | £50,000 deposit; £9,000 tax and costs | Renter begins with £59,000 invested |
Evidence