Finance

Rent vs Buy

Compare the real long-term cost of buying a home versus renting and investing the difference.

The decision to rent or buy a home is one of the most important financial choices you will make. The answer depends on multiple factors: your time horizon, ability to save for a deposit, expected property market trends and the opportunity cost of investing money not put towards a deposit. There is no single right answer: there are situations where renting is clearly better and others where buying is.

This calculator models both scenarios over 30 years: the cumulative cost of buying (mortgage, transaction costs, taxes, maintenance and the time value of money) versus the cost of renting and investing the difference in a fund at the return you estimate. The result shows you the exact break-even point: the year from which buying starts to be more profitable than renting.

Enter the data to compare both options over the long term.

Indicative simulation that does not account for the taxation of alternative investments or changes in the property market.

How the real cost of renting and buying is compared

The comparison adds up two parallel scenarios year by year. In the buying scenario it counts the deposit, the transaction costs and taxes, the mortgage payments made, property tax, community fees, insurance and maintenance; from that cumulative cost it subtracts the equity built up, that is, the estimated value of the home minus the outstanding debt. In the renting scenario it accumulates the rent paid, updated with the expected annual increase, and adds the return obtained by investing both the deposit and the monthly difference between mortgage payment and rent. The break-even point is the year in which the net cost of buying drops below that of renting.

Worked example

For a €250,000 home with a 20% deposit (€50,000) and a €200,000 mortgage at 3% over 30 years, the monthly payment is around €843. Adding property tax, community fees, insurance and maintenance, the monthly outlay approaches €1,100. Against a rent of €900 a month, the buyer pays €200 more, but about €343 of the first year's payments repay principal and turn into equity. The tenant, meanwhile, has the €50,000 deposit available to invest. With home appreciation of 2% a year and an investment return of 5%, break-even typically falls between year 8 and year 12.

Costs of buying a home (on top of the price)

Item	Indicative cost
Transfer tax (second-hand)	6 – 10 %
VAT + stamp duty (new build)	10 % + 0,5 – 1,5 %
Notary	600 – 900 €
Land registry	400 – 650 €
Administrative agency	300 – 500 €
Property valuation	300 – 600 €

How to interpret the result

The break-even point is the figure to look at, but weigh it against how long you realistically expect to stay. If you foresee moving before that year, renting almost certainly wins, because transaction costs are amortised very slowly and selling brings new costs of its own. If you plan to stay longer, buying usually comes out ahead. Keep in mind that the result is highly sensitive to two assumptions nobody can predict: home appreciation and the return on the alternative investment. Try varying them in pessimistic and optimistic scenarios to see how robust the conclusion is, and remember that buying also adds a non-financial value — stability — that no spreadsheet captures.

Frequently asked questions

The break-even point is the year from which the cumulative net cost of buying a home becomes lower than renting and investing the difference. Before that point, renting may be financially more advantageous; after it, buying starts to pay off thanks to wealth accumulation.

In addition to the purchase price, you must account for: taxes (transfer tax of 6–10% for second-hand properties, or 10% VAT for new builds), notary fees, land registry fees, administrative costs, property valuation and a possible mortgage arrangement fee. In total these can add 10–15% on top of the purchase price.

It depends on your personal situation: time horizon, ability to save for a deposit, job stability and expectations of geographical mobility. In general, buying tends to be more advantageous in the long term (more than 10–15 years) in markets where property prices rise moderately. Renting gives more flexibility and lets you invest the difference to obtain an alternative return.

As a general rule, between 30% and 35% of the property price. Banks typically finance up to 80% of the appraised value, so you need to put down a 20% deposit. On top of that come the transaction costs, another 10-15% between taxes, notary, land registry, administrative fees and valuation. For a €250,000 home that means about €50,000 deposit plus €25,000-37,500 in costs: roughly €75,000-87,500 of prior savings. It is also wise to keep an additional buffer for unexpected expenses and for furnishing the property.

It is the key to making the comparison fair. If buying entails a higher monthly payment than renting, or requires tying up substantial capital in the deposit, the tenant has that money available to invest in other assets. The honest comparison is not 'renting versus buying' but 'renting plus investing the difference versus buying'. If that capital is invested at a reasonable return, renting can stay competitive for quite a few years. If the difference is simply spent, buying almost always wins in the long run thanks to the equity accumulated.