Is it cheaper to buy or rent in the UK in 2025?
There is no universal answer. It depends on your location, deposit size, mortgage rate, and how long you plan to stay. In high-cost areas like London, renting is often cheaper in the short term because house prices are stretched relative to rents, and stamp duty represents a large upfront barrier. In areas with lower price-to-rent ratios, buying can become cheaper within just a few years. Our calculator lets you input your specific numbers to find your personal break-even year.
What is stamp duty for first-time buyers in 2025?
From 1 April 2025, first-time buyers in England and Northern Ireland pay 0% SDLT on the first £300,000 and 5% on the portion between £300,001 and £500,000. No relief applies if the purchase price exceeds £500,000 (standard rates apply in full). Non-first-time buyers pay 0% up to £125,000, 2% from £125,001 to £250,000, 5% from £250,001 to £925,000, 10% from £925,001 to £1.5m, and 12% above £1.5m. Scotland uses LBTT and Wales uses LTT, both with different rates.
What is the opportunity cost of a house deposit?
The opportunity cost of your deposit is the investment return you give up by locking that money into property rather than investing it. A £35,000 deposit invested in a globally diversified equity index fund at a 7% nominal annual return grows to approximately £69,000 in 10 years. When you buy instead of rent, you gain equity in your home but forgo this investment growth. This calculator computes both the equity you accumulate and the investment pot you would build by renting and investing, so you can compare them directly.
How long does buying take to beat renting?
Typically 5–15 years, depending on mortgage rate, deposit size, rent level, and property appreciation. Transaction costs (stamp duty, legal fees, and estate agent fees) must be recouped before buying breaks even. With low mortgage rates and strong appreciation, buying can win in 3–5 years. With high rates and modest appreciation, it can take 15+ years. Our calculator shows your personalised break-even year on the chart.
Does this calculator work for Scotland or Wales?
Currently, no. This calculator uses SDLT rates for England and Northern Ireland. Scotland uses the Land and Buildings Transaction Tax (LBTT) and Wales uses the Land Transaction Tax (LTT), both with different bands and rates. We plan to add support for Scotland and Wales in a future update. If you are in Scotland or Wales, you can still use the calculator but you should manually adjust the buying costs field to approximate your actual transaction tax.
Should I use an ISA or a general investment account for this comparison?
For most people, investing the deposit in a Stocks and Shares ISA is preferable because all growth is tax-free (no dividend tax, no capital gains tax). The ISA allowance is £20,000 per year, so a deposit of up to £20,000 could be fully sheltered in year one. For deposits above the annual ISA allowance, a General Account (GIA) would hold the remainder, which is subject to dividend income tax (above the £500 allowance) and capital gains tax on disposal (above the £3,000 annual exemption). Switch between ISA and General Account in the financial assumptions to see the difference.