faq•2026-07-03
Rent vs Buy Assumptions That Matter Most (2026)
Returns, rent growth, home appreciation, and taxes: learn which assumptions matter most and how to choose realistic ranges.
Rent vs Buy Assumptions That Matter Most
Calculating "rent vs buy" is an exercise in predicting the future. Since no one has a crystal ball, the quality of your assumptions determines the value of the result.
The "Big Four" Assumptions
These inputs have the highest leverage:
- Investment Return (#investment-return):
- Base Case: 5% - 7% (Balanced Portfolio).
- Implication: High returns favor Renting.
- Home Appreciation (#home-price-growth):
- Base Case: 2% - 4% (Historical average ~inflation).
- Implication: High appreciation favors Buying (leverage effect).
- Rent Growth (#rent-growth):
- Base Case: 2% - 3% (Inflation + small surcharge).
- Implication: High growth favors Buying (locks in your housing cost).
- Time Horizon (#horizon):
- Base Case: Your actual planned stay.
- Implication: Long horizons favor Buying (amortizing closing costs).
Nominal vs Real (Inflation)
Should you include inflation?
- Yes. Rents rise. Maintenance costs rise. Stock markets grow in nominal terms.
- Recommendation: Use nominal figures for everything. e.g. If you expect 2% inflation, use 2% rent growth and 7% stock return (5% real + 2% inflation).
Sensitivity Table
| Variable | Increase It | Result Usually Favors... |
|---|---|---|
| Returns | 4% -> 8% | Rent |
| Home Growth | 2% -> 4% | Buy |
| Rent Growth | 1% -> 3% | Buy |
| Housing Tax | 0% -> 2% | Rent |
FAQ
Why default to 4-5% buyer costs?
This covers transfer tax (2%), notary, advice, and appraisal. If you are under 35 and buy under the limit (€575k in 2026), your costs are much lower (maybe 1-2%).
What is a safe maintenance %?
1% per year. New builds might need 0.5% initially; old monumental houses might need 1.5% or more.
Related Pages
Sources
- Last updated: 2026-07-03
- CBS: Inflation