This is a tool that compares the benefits of renting versus buying a house by calculating the net profit from renting and buying. In addition, it displays various intermediate, calculated results.

Note: The comparison is based on a cash buyer, i.e. no mortgage, and a renter who keeps the money in the bank.

Note: The tool does not account for tax effects.

The information required for the calculation of the profits can be considered in three parts, matching the layout of the tool.

The first part is the general information related to both buying and renting. This information is described in the following list:

• The holding period in years, which is the number of years the property is owned for before being sold.
• The annual interest rate, as an AER. This is usually expressed in percentage terms (unless the formatting is explicitly set to express it as a decimal).
• Cost inflation as a yearly rate. This is usually expressed in percentage terms (unless the formatting is explicitly set to express it as a decimal).

The second part is the information related to buying the property, which results in the calculated net profit from buying. In addition, as the information is supplied, various intermediate, calculated results are shown: the total purchase cost, the total of the back-end costs associated with owning a house, the final property price and the net capital return on the property. This information is described in the following list:

• The property cost, which is the price paid for the property.
• The purchase costs, which is the sum of the one-off costs involved in the property purchase. If you need a tool to sum up the individual purchase costs to obtain this total, then you can use the UK House Purchase Reckoner or House Purchase Reckoner.
• The property taxes as a yearly, quarterly, monthly (default) or weekly amount.
• The insurance as a yearly, quarterly, monthly (default) or weekly amount.
• The cost of repairs and maintenance as a yearly, quarterly, monthly (default) or weekly amount.
• The total payment for utilities as a yearly, quarterly, monthly (default) or weekly amount. If you need a tool to sum up the individual utility payments to obtain this total, then you can use the Total Utility Bill Reckoner.
• The house price appreciation as a yearly rate. This is usually expressed in percentage terms (unless the formatting is explicitly set to express it as a decimal).
• The estate agent fees for selling the property, charged as a percentage of the final selling price.
• The legal fees charged for the sale of the property.

The third part is the information related to renting the property, which results in the calculated net profit from renting. In addition, as the information is supplied, various intermediate, calculated results are shown: the total of the back-end costs associated with renting a house, the total rent, the total rental cost and the total interest accumulated. This information is described in the following list:

• The rent payment as a yearly, quarterly, monthly (default) or weekly amount.
• The finder's fee, which is the fee charged for finding the rental property.
• The property taxes as a yearly, quarterly, monthly (default) or weekly amount.
• The total payment for utilities as a yearly, quarterly, monthly (default) or weekly amount. If you need a tool to sum up the individual utility payments to obtain this total, then you can use the Total Utility Bill Reckoner.
• The annual rental inflation.

Associated tool link: http://www.coggit.com/tools/renting_vs_buying_a_house.html