Rent vs. Buy Calculator in London (2026)
Is it better to rent or buy a home in London? See the break-even point and total cost comparison over your chosen time horizon.
Property Price
£605,000
55m² · £11,000/m²
Down Payment
£60,500
10% of purchase price
Monthly Mortgage
£3,151
4.9% rate · 25yr term
Monthly Rent
£2,200
City centre
📅 Break-even point: Year 6
Buying becomes cheaper than renting after 6 years in London, once property appreciation and equity are factored in.
After 10 years: Buying saves approximately £57,568 vs renting.
Cumulative Cost Comparison — London
Net costs after accounting for property appreciation and investment returns on down payment.
| Year | Net Buy Cost | Net Rent Cost | Property Value | Verdict |
|---|---|---|---|---|
| 1 | £45,772 | £20,259 | £621,940 | 🔴 Rent |
| 2 | £63,274 | £40,881 | £639,354 | 🔴 Rent |
| 3 | £79,688 | £61,858 | £657,256 | 🔴 Rent |
| 4 | £94,972 | £83,183 | £675,659 | 🔴 Rent |
| 5 | £109,080 | £104,847 | £694,578 | 🔴 Rent |
| 6 | £121,964 | £126,839 | £714,026 | 🟢 Buy |
| 7 | £133,574 | £149,147 | £734,019 | 🟢 Buy |
| 8 | £143,859 | £171,755 | £754,571 | 🟢 Buy |
| 9 | £152,765 | £194,647 | £775,699 | 🟢 Buy |
| 10 | £160,235 | £217,803 | £797,419 | 🟢 Buy |
Monthly Cost Breakdown
Buying
Mortgage: £3,151
Maintenance: £605
Property Tax: £150
Total Monthly: £3,906
Does not include down payment of £60,500
Renting
Monthly Rent: £2,200
Annual Increase: +3% assumed
Opportunity Gain: Down payment invested at 7%/yr
Total Monthly: £2,200
Rent increases 3%/yr in projection
Can you afford to buy in London?
Monthly net income: £4,937
Monthly mortgage: £3,151
Mortgage-to-income ratio: 63.8%
🔴 Stretched — consider a higher deposit or longer term
Down payment savings needed: £87,725
At 20% savings rate, years to save: 7.4 years
Notes & Assumptions
This calculator uses the following assumptions for London in 2026: property price £11,000/m² × 55m², mortgage rate 4.9% over 25 years, 10% down payment, transaction costs 4.5%, annual maintenance 1.2%, property appreciation 2.8%/yr, rent inflation 3%/yr, opportunity cost of capital 7%/yr. 5yr fixed avg 4.91% (Moneyfacts Feb 2026). SDLT applies. Leasehold common.
Same calculator, other cities
Frequently Asked Questions
Is it better to rent or buy in London in 2026?
Based on 2026 data, buying a home in London typically becomes financially advantageous after 6 years, once property appreciation and equity are factored in. With a mortgage rate of 4.9% and estimated annual appreciation of 2.8%, buying makes sense for long-term residents.
How much do you need to earn to buy in London?
A typical 55m² apartment in London costs approximately £605,000 in 2026. With a 10% down payment of £60,500, the monthly mortgage is £3,151. Financial advisors recommend keeping mortgage payments below 28–35% of net monthly income, which implies a gross salary of at least £126,058 per year to comfortably afford this purchase in London.
What is the price-to-rent ratio in London?
The price-to-rent ratio in London is approximately 24x in 2026 — meaning it takes 24 years of rent to equal the purchase price. A ratio above 20 generally favours renting; below 15 generally favours buying. London's ratio of 24 suggests the decision depends heavily on your time horizon and expected appreciation.
How this calculator works
This calculator compares the total cost of renting versus buying over a configurable time horizon. It includes mortgage payments, transaction costs, maintenance, property appreciation, rent inflation, and the opportunity cost of tying up capital in a down payment.
What's included
- Mortgage principal and interest payments
- Transaction costs (stamp duty, notary, etc.)
- Annual maintenance and property tax
- Property appreciation and rent inflation
- Opportunity cost of capital (7% default)
What's not included
- Renovation or major repair costs
- Home insurance premiums
- Tax relief on mortgage interest (varies by country)
- Emotional or lifestyle value of ownership
Data sources: Central bank mortgage rate data, local property price indices, Numbeo rental averages, and official transaction cost schedules. Updated for 2026.