Rent or buy in 2026? The calculation most articles get wrong

The honest answer to “should I rent or buy?” in 2026 is: it depends on four numbers that most articles ignore. When you include them, the calculation looks very different from the standard advice.

The four numbers everyone forgets

1. Maintenance costs: 1% of property value per year. The Royal Institution of Chartered Surveyors (RICS) recommends budgeting 1-1.5% of your property’s value per year for maintenance and repairs. On a £300,000 property, that is £3,000-£4,500 annually — money your landlord pays when you rent. No rent-vs-buy calculator on any UK property website includes this.

2. Transaction costs, amortised. Buying a £300,000 property costs approximately £12,000-£15,000 in transaction costs (stamp duty, solicitor, survey, mortgage arrangement fees). If you sell after 5 years, you incur another £5,000-£8,000. Spread over 5 years, that is £3,400-£4,600 per year — a cost that vanishes if you stay 25 years but dominates if you move every 5.

3. Opportunity cost of the deposit. A £60,000 deposit (20% on a £300,000 property) invested in a global index tracker has historically returned 7-8% annually before inflation. That is £4,200-£4,800 per year in foregone returns. This does not mean you should invest instead — but it is a real cost of deploying capital into a single illiquid asset.

4. Mortgage interest is not building equity. In the early years of a 25-year repayment mortgage at 4.5%, approximately 60% of your monthly payment goes to interest, not principal. On a £240,000 mortgage, that is roughly £10,800 per year in interest — functionally equivalent to rent, except you also pay maintenance.

The honest comparison for 2026

Cost component	Buying (£300K, 20% deposit)	Renting (equivalent property)
Mortgage interest / rent	£10,800/year	£14,400/year (£1,200/mo)
Mortgage principal (equity)	£7,200/year	—
Maintenance	£3,000/year	£0
Insurance (buildings + contents)	£600/year	£200/year
Transaction costs (5yr amortised)	£3,400/year	£300/year
Opportunity cost of deposit	£4,200/year	—
Total annual cost	£29,200	£14,900
Less: equity built	−£7,200	—
Net annual cost	£22,000	£14,900

In this scenario — a £300,000 property, 20% deposit, 4.5% mortgage rate, £1,200/month rent — renting is £7,100/year cheaper before considering property price appreciation. If property prices rise 3% annually (the 25-year average), that’s £9,000/year in unrealised gains — which tips the balance toward buying, but only if you hold for long enough to recoup the transaction costs.

The breakeven calculation

The critical variable is how long you stay. Transaction costs are front-loaded: they hurt if you move in 3 years, but they’re negligible over 15 years. Using current 2026 figures:

• Stay less than 3 years: Renting almost always wins. Transaction costs, early-year interest weighting, and the opportunity cost of deposit make short-term buying expensive.
• Stay 3-7 years: Break-even zone. Buying wins only if prices appreciate 2%+ annually AND you don’t need to sell urgently.
• Stay 7+ years: Buying usually wins. Transaction costs are amortised, principal repayment accelerates, and long-run price appreciation compounds.

What the standard advice misses

The phrase “renting is throwing money away” ignores that a significant portion of mortgage payments is also “thrown away” — to interest, maintenance, transaction costs, and opportunity cost. The difference is that mortgage interest buys you optionality: the option to benefit from price appreciation and the option to stay as long as you like. Whether that option is worth £7,100/year depends on your circumstances, not on a slogan.

The right question is not “should I rent or buy?” but “how long will I stay, and what is that certainty worth to me?”