Rent vs Buy: How Stamp Duty Changes the Equation
Compare the true cost of renting versus buying over up to 30 years, with stamp duty factored in as a lump-sum upfront cost. Discover your breakeven year and see the year-by-year financial picture.
Last verified: March 2026
Key Takeaways
- Stamp duty is a sunk cost — it earns no return and must be funded from your savings alongside the deposit.
- The breakeven year is when cumulative buying costs (minus equity) become lower than cumulative rent payments.
- FTBs buying under £300,000 pay zero SDLT, making their breakeven year much earlier than standard buyers.
- Additional property buyers pay a 5% surcharge, which can push breakeven beyond 10 years at typical prices.
- Property growth rate is the single biggest variable — a 1% change shifts the breakeven by 2-3 years.
In this article
How to Use This Tool
- 1Enter the property price you're considering (or your current rental area's average).
- 2Enter your current monthly rent payment.
- 3Set your deposit percentage and mortgage details (rate and term).
- 4Choose your buyer type — this determines which SDLT rates apply.
- 5Set the time horizon (how many years you plan to compare).
- 6Optionally expand "Advanced Settings" to fine-tune growth rates and maintenance costs.
- 7Review the summary cards, stamp duty spotlight, breakeven year, and year-by-year table.
Rent vs Buy Calculator
Your Details
Monthly Mortgage Payment
£1,501/mo
Deposit: £30,000 · SDLT: £5,000
Buy Net at Year 10
£60,306
Rent Net at Year 10
£-66,564
Net Difference (Buy − Rent) at Year 10
+£126,870
Buying is ahead financially at this point.
Breakeven Year
Year 2
When buying's net position first exceeds renting's
Stamp Duty Spotlight
SDLT Amount
£5,000
As % of Deposit
16.7%
Opportunity Cost over 10 yrs
£3,144
if invested at 5.0%
Year-by-Year Breakdown
| Year | Rent Paid | Buy Cost | Buy Equity | Buy Net | Rent Net | Difference |
|---|---|---|---|---|---|---|
| Yr 1 | £14,400 | £20,118 | £44,981 | £24,864 | £29,214 | £-4,351 |
| Yr 2 | £29,232 | £35,053 | £60,507 | £25,454 | £22,711 | +£2,743 |
| Yr 3 | £44,509 | £49,797 | £76,599 | £26,802 | £15,408 | +£11,395 |
| Yr 4 | £60,244 | £64,338 | £93,278 | £28,940 | £7,216 | +£21,724 |
| Yr 5 | £76,452 | £78,666 | £110,566 | £31,899 | £-1,960 | +£33,859 |
| Yr 6 | £93,145 | £92,770 | £128,487 | £35,717 | £-12,224 | +£47,941 |
| Yr 7 | £110,339 | £106,637 | £147,065 | £40,427 | £-23,690 | +£64,117 |
| Yr 8 | £128,050 | £120,255 | £166,325 | £46,069 | £-36,479 | +£82,548 |
| Yr 9 | £146,291 | £133,611 | £186,293 | £52,682 | £-50,723 | +£103,404 |
| Yr 10 | £165,080 | £146,691 | £206,997 | £60,306 | £-66,564 | +£126,870 |
Green rows: buying ahead. Red rows: renting ahead. "Difference" = Buy Net minus Rent Net.
Understanding Your Results
Total Cost of Buying represents all costs that do not build equity: stamp duty, mortgage interest, maintenance, and service charges. It does not include principal repayments (which do build equity).
Total Cost of Renting is the cumulative rent payments over the period — all of which are costs with no return.
Net Position is the key metric: for buyers, it is equity built (deposit + principal paid + appreciation) minus non-equity costs. For renters, it is the investment value of their deposit savings minus cumulative rent paid.
Breakeven Year is when the buyer's net position first exceeds the renter's. Before this year, renting is financially ahead; after it, buying wins.
The tool does not account for moving costs, conveyancing fees, or survey costs on the buy side, nor letting agent deposits on the rent side. Factor in an additional £3,000–£5,000 for buy transaction costs.
How Stamp Duty Tips the Balance
Stamp duty is a sunk cost — unlike the deposit (which you get back as equity), SDLT earns nothing. Every pound paid in stamp duty is permanently lost from your financial position.
This has two effects on the rent-vs-buy equation:
- Immediate drag: Your starting position is immediately worse by the SDLT amount, while the renter has that money working for them.
- Compound opportunity cost: At 5% annual return, £12,500 SDLT on a £500,000 property becomes £20,360 in 10 years. That is the full opportunity cost of the stamp duty.
SDLT by Buyer Type at Common Price Points
| Price | Standard | FTB | Additional |
|---|---|---|---|
| £200,000 | £1,500 | £0 | £11,500 |
| £300,000 | £5,000 | £0 | £20,000 |
| £400,000 | £10,000 | £5,000 | £30,000 |
| £500,000 | £15,000 | £10,000 | £40,000 |
| £750,000 | £27,500 | £27,500 | £65,000 |
FTB relief can eliminate this drag entirely for properties under £300,000 — a significant advantage that often brings the breakeven to Year 1 or 2.
Why Your Buyer Type Matters
First-Time Buyer (under £300k)
Zero SDLT. Fastest possible breakeven — you start with no stamp duty drag. Buying is almost always ahead of renting within 2-3 years at normal property growth.
First-Time Buyer (£300k–£500k)
Reduced SDLT (5% only on amount above £300k). Still a significant advantage. At £450k, FTB pays £7,500 vs standard buyer's £11,250.
Standard Buyer
Full SDLT rates apply. Breakeven typically 5-8 years at 3% property growth. Stamp duty adds meaningful drag but is usually overcome by appreciation over time.
Additional Property (+5%)
Highest stamp duty burden. The 5% surcharge dramatically increases upfront costs. Breakeven can extend to 10+ years. Renting may be financially superior for shorter holding periods.
Worked Examples
Example 1: FTB buying £280,000 property, renting at £1,000/month
SDLT: £0 (FTB relief — under £300k)
Deposit (10%): £28,000
Mortgage: £252,000 at 4.5% over 25 yrs
Monthly mortgage: ~£1,399
Year 10 buy costs (interest+maintenance): ~£82,000
Year 10 equity: ~£121,000 (inc. appreciation at 3%)
Year 10 buy net: ~+£39,000
Year 10 rent cumulative: ~£138,000
Verdict: Buying wins from Year 1. Zero SDLT means no upfront drag — equity build-up immediately exceeds what a renter accumulates.
Example 2: Standard buyer, £450,000 property, renting at £1,500/month
SDLT: £11,250
Deposit (10%): £45,000
Total upfront: £56,250
Opportunity cost (10yr at 5%): ~£18,340
Breakeven: ~Year 6 with 3% property growth
If growth drops to 1%: breakeven pushes to Year 9+
Key insight: SDLT as % of deposit = 25%
Verdict: Buying wins from around Year 6. The £11,250 SDLT costs ~£18k in opportunity cost over 10 years but is overcome by property appreciation.
Example 3: Additional property buyer, £350,000, renting at £1,300/month
SDLT: £24,500 (standard £7,000 + 5% surcharge £17,500)
Deposit (10%): £35,000
Total upfront: £59,500
Breakeven: Year 9-10 (if at all within 10yr horizon)
5% surcharge extra opportunity cost: ~£17,500 over 10 yrs
SDLT as % of deposit: 70%
Verdict: Renting is often cheaper for short-to-medium holding periods. The 5% surcharge creates enormous upfront drag that property appreciation struggles to overcome within 10 years.
Frequently Asked Questions
Does stamp duty make renting cheaper than buying?
Stamp duty increases the upfront cost of buying but does not make renting automatically cheaper. For a £300,000 property, a standard buyer pays £2,500 in SDLT. Over a 10-year period, property appreciation and equity build-up typically outweigh this cost. However, if property prices stagnate and mortgage rates are high, the opportunity cost of that lump sum (invested elsewhere) can tip the balance toward renting.
How does stamp duty affect the breakeven point of buying vs renting?
Stamp duty pushes the breakeven point later by 6-18 months on average. For a £500,000 property, the £12,500 SDLT means a buyer needs additional property appreciation before they break even versus a renter who invests the equivalent deposit and stamp duty savings. With 3% annual property growth, the breakeven typically shifts from around Year 5 to Year 6-7.
Should first-time buyers factor stamp duty into the rent vs buy decision?
First-time buyers purchasing under £300,000 pay no stamp duty at all, giving them an immediate advantage over renters in terms of breakeven speed. Between £300,001 and £500,000, FTB relief reduces SDLT significantly. Above £500,000, standard rates apply and the calculation changes substantially.
What assumptions does this tool make?
The tool assumes: constant mortgage interest rate over the period, annual compounding for property growth and rent increases, immediate reinvestment of savings at the specified return rate, no transaction costs when selling, and no tax implications on investment returns. Real outcomes will vary based on market conditions.
How do additional property surcharges affect the rent-vs-buy calculation?
Buy-to-let and second home buyers face a 5% surcharge on top of standard rates. For a £300,000 property, this adds £15,000 (total SDLT £17,500 vs £2,500 standard). This dramatically extends the breakeven period and can make renting more attractive for short-to-medium holding periods.
Can I add stamp duty to my mortgage instead of paying upfront?
Some lenders allow stamp duty to be added to the mortgage, but this increases your LTV ratio and may push you into a higher interest rate tier. The tool shows the upfront payment scenario. Adding SDLT to your mortgage means paying interest on it for 25+ years, which can double the effective cost.
Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.