Landlord vs Tenant Cost Comparison

Comparing buying against renting over the long run depends on more than the monthly payment. This calculator puts both paths on an equal-cash-flow footing. The buyer puts the deposit into the home and pays the monthly housing cost, while the renter invests the same deposit and invests the monthly difference between the two housing costs at an alternative return. It then compares each side's net worth at the end of the period.

Take the defaults: a 400,000 property, a 25% deposit (100,000), an 1,800 monthly mortgage plus 1.5% annual maintenance, against 1,500 a month in rent over 10 years. The owner's monthly housing cost runs higher than the rent, so the renter invests the 800 gap each month, alongside the 100,000 deposit, at 7%. After 10 years the renter's investments reach roughly 339,000. The owner's home equity, based on 3% annual appreciation and a flat loan balance, reaches roughly 238,000. On these assumptions renting ends about 102,000 ahead.

The outcome turns on three inputs above all: the alternative return, the property appreciation rate, and the gap between the mortgage and the rent. Push appreciation toward 6-8%, or narrow the mortgage-to-rent gap, and the balance moves toward owning. Lower the investment return, or widen the cost gap, and it moves toward renting. There is no universal answer here; the result is whatever the assumptions you enter imply.

Quick example

With a property price of 400,000, a 25% deposit, an 1,800 monthly mortgage and 1,500 monthly rent over 10 years, the result is 101,867.43 in the renter's favour. Change any figure and watch the output shift. Seeing the pattern is often more useful than memorising the formula.

Which inputs matter most

You enter Property Price, Deposit %, Monthly Mortgage Payment, Monthly Rent, Time Period, Alternative Return, Property Appreciation, and Annual Maintenance. The appreciation rate and the alternative return tend to move the result most, because both compound across the full period.

What's happening under the hood

The renter's net worth is the deposit plus the monthly housing-cost difference, both grown at the alternative return. The owner's net worth is the projected home value minus the outstanding loan. The loan is held flat: with no interest rate entered, principal paydown is not modelled, so the owner's equity here comes from appreciation alone. The full formula is listed below, so you can retrace the working by hand.

What this leaves out

This is a simplified model. It excludes buying and selling transaction costs, property and rental taxes, insurance, rent increases over time, and any principal paid down on a repayment mortgage. Real outcomes vary with all of these, so the figure is best read as one scenario rather than a forecast.