Does the NYT 'rent or buy' calculator work for the UK?

[mubington]

I was fiddling with the famous New York Times, buy / rent calculator, but I'm wondering if it works for the UK. The property tax section seems to have a large bearing on the result, but I'm struggling to work out how to set this to mirror a UK situation.


Property tax sounds kinda harsh. In the UK we have council tax which is roughly in line with the size of the property, but it applies equally to rentals.

[Doubleh]

Property tax and council tax both apply equally to rentals - the difference is only one of convention. In the US the convention is that it is paid by the owner, in the UK it is usually paid by the occupier but some rentals include council tax and utilities. Of course the difference will ultimately be reflected in the level of the rent and the market adjusts to compensate. In general you can just treat council tax the same as property tax.

The calculator probably still isn't a great idea for the uk for two other reasons - firstly in the UK mortgage interest on your residential property is not tax deductible as it is in the US. Secondly the US typically has interest rates fixed for the term of the mortgage. Interest rates in the UK are usually variable, or fixed for a short time eg 2-5 years.

Both of these will have a pretty substantial effect on the result and both make owning less favourable than the calculator would suggest (unless you expect interest rates to fall).

I guess you could use it, and if it says renting is best you can be pretty confident. If it says buying is best you want to verify that pretty carefully

[mubington]

That's super useful. Thanks.

[Doubleh]

Glad to be able to help