Rent vs Buy Calculator

The usual framing (“owning is better because you build equity, renting is throwing money away”) is wrong. Both are expensive. The right question is: over my expected stay, will buying leave me wealthier than renting and investing the difference?

Buying has costs renters don’t pay: transfer duty + attorney fees (~6–9% of the price, up front), levies and rates, insurance, maintenance (budget 1% of property value per year), and — most importantly — interest on the bond. Renting has the simplicity of a monthly payment and the freedom to move.

The “invest the difference” half of the comparison is what makes the calculation hard. If you buy, your deposit is tied up in the property. If you rent, you could invest that deposit in a TFSA, unit trust, or ETF earning 8–12% a year. For short stays, that compound return usually beats the property’s capital appreciation net of costs.

For a typical SA property at 2026 prime rates, the rough rule of thumb is:

• Staying under 5 years: renting almost always wins. Transfer and bond costs haven’t been amortised; capital appreciation hasn’t offset the interest paid; selling costs (agent commission ~7% + VAT) erase early equity gains.
• 5–10 years: it’s close. Depends on your interest rate, property type, and what you’d have done with the deposit.
• 10+ years: buying usually wins, because your bond balance drops meaningfully (early years are interest-heavy; later years chip into capital) and property has usually compounded enough to offset the costs.

These are averages. A sectional-title flat in a slow-market area can lose money over 10 years; a well-located house near a good school can double in 7.

Cost of buying per month (ownership cost) =

• Bond instalment (interest portion — the capital portion is “forced saving”, not a cost).
• Rates (municipal).
• Levies (sectional title / HOA).
• Homeowners’ insurance + building insurance (often required by bank).
• Maintenance provision (budget 1%/year of property value; some years less, some more).
• Minus: any capital appreciation above inflation (the “return” on owning).

Cost of renting per month = the rent, minus the compound return you earn by investing your would-be deposit and any cashflow difference elsewhere.

The answer flips depending on how property vs equities perform. Over 20-30 years, residential property in well-located SA suburbs has often tracked or slightly beaten JSE returns — which is why long-stay buying typically wins.

The math is only half the decision. The other half:

• Freedom to move. Renting lets you take a new job in another city with 30 days’ notice. Selling costs ~9% of the property value — a six-figure penalty on a bad-timed move.
• Customisation. You can renovate your own home. Landlords rarely let renters paint, much less break out walls.
• Forced saving. The capital portion of your bond is a disciplined savings mechanism that most people wouldn’t replicate voluntarily. If you rent and intend to invest the difference, be honest about whether you actually will.
• Inflation hedge. Owning with a fixed-term loan means your biggest monthly cost is capped at a rand value set years ago. Rent rises with CPI (typically faster).

Enter the property price, deposit, interest rate, bond term, expected monthly rent for the same property, expected property appreciation rate, expected rental growth rate, expected ETF alternative return, and your stay horizon. The calculator projects both paths (buy and rent + invest) and shows which leaves you wealthier at your exit point.

All returns are nominal (not inflation-adjusted). If you want real returns, subtract expected inflation from both the property growth and the ETF return inputs.

• SARB — Current prime rate and Monetary Policy Committee statements
• StatsSA — Residential property price indices
• SARS — Primary residence capital gains exclusion