Rent or Buy Your Home in France: What Really Tips the Balance
Is renting throwing money away? The like-for-like calculation, a worked example over 25 years in France, and the three assumptions that flip the answer: horizon, price, investment.
"Renting is throwing money away." The saying is handed down from one generation to the next, and it is half true. Rent, once paid, never comes back. But the buyer also pays, every month, sums that never come back: loan interest, borrower insurance, property tax (the French taxe foncière), building service charges, upkeep. Not to mention purchase costs on day one and selling costs on the last day.
So the real question is not "pay rent or repay a loan", but: on the same budget, which of the two paths leaves more wealth, and after how long? The answer depends on three assumptions nobody knows in advance. This article sets them out one by one, with figures. The example is French — French purchase costs, French property tax, French tax rules — but the reasoning holds anywhere.
The only fair calculation: the same budget
Comparing a €1,100 rent with a €1,462 loan payment makes no sense: the buyer spends more each month, and also puts down a deposit on the day of signing. An honest comparison gives both households the same budget, and has the renter invest everything the buyer sinks into bricks and mortar:
- on signing day, the renter invests the sum the buyer puts down;
- every month, they invest the gap between what ownership costs and their rent;
- at the end, you compare what each would own if they sold everything that day: the home minus the outstanding loan and selling costs on one side, the investment net of tax on the other.
That is what our rent vs buy calculator does, year by year. It is also what makes the comparison true: a renter who spends the gap instead of investing it is no longer comparing anything — they are consuming.
A worked example, from the first month to year 25
Take a €300,000 flat bought with a €40,000 down payment. Purchase costs on an existing property in France — mostly transfer duties, often called "notary fees" — are around 8 % of the price and add €24,000: the buyer therefore borrows €284,000 over 25 years at 3.3 %, with borrower insurance of 0.30 % a year.
| Each month, in the first year | Owner | Renter |
|---|---|---|
| Loan, insurance included | €1,462 | — |
| Property tax, service charges, insurance, upkeep | €443 | — |
| Rent | — | €1,100 |
| Invested each month | — | €806 |
| Total budget | €1,906 | €1,906 |
The market assumptions, which you would change for your own city and time: the home's price rises 1.5 % a year, so does the rent, and the renter's investment returns 4 % a year before tax, with 30 % tax on the gains when sold. Selling costs: 5 % of the price.
Here is what each would own after selling everything:
| After… | Gap between the two paths |
|---|---|
| 5 years | the renter is ahead by €33,863 |
| 10 years | the renter is ahead by €25,749 |
| 15 years | the renter is ahead by €14,462 |
| 20 years | buying catches up with renting |
| 25 years | the buyer is ahead by €18,304 |
Two lessons. First, buying starts with a handicap: €24,000 of purchase costs, then 5 % selling costs, which no price rise pays back in two or three years. Second, that handicap shrinks with time: each payment repays a little more principal and a little less interest, and the home's value grows meanwhile. In this example, it takes twenty years for the buyer to catch up with the renter.
The three assumptions that flip the answer
Change a single assumption in the example, keeping all the others equal, and look at what happens to the gap after 15 years:
| What changes | Gap after 15 years | Buying catches up with renting… |
|---|---|---|
| Nothing (the example) | renting ahead by €14,462 | in year 20 |
| Prices stagnate (0 % a year) | renting ahead by €79,554 | not within 30 years |
| Prices rise 3 % a year | buying ahead by €66,155 | in year 7 |
| The investment returns 2 % | buying ahead by €17,106 | in year 13 |
| The investment returns 6 % | renting ahead by €53,780 | not within 30 years |
| Rent is €1,400 | buying ahead by €60,077 | in year 8 |
| Rent is €900 | renting ahead by €64,154 | not within 30 years |
1. How long you will stay
This is the only assumption you partly control, and often the most decisive. Entry and exit costs are paid once: over five years they weigh heavily; over twenty-five, they are diluted. A likely job move, a family about to grow or a possible separation shorten the real horizon, whatever you had in mind when you signed.
2. The ratio between price and rent
For the same home, €300,000 to buy or €1,100 a month to rent: the price equals 22.7 years of rent. The higher that ratio, the better renting looks, and vice versa. It varies a great deal from one city to another and from one neighbourhood to the next: that is why no general rule holds, and why the same calculation gives opposite answers in Paris and in a mid-sized town. Going from €1,100 to €1,400 rent, at the same price, is enough for buying to catch up by year 8.
3. What bricks and the investment would return
These are the two assumptions nobody knows. Prices that stagnate for fifteen years — it has happened in some cities — make renting win very clearly; prices rising 3 % a year make buying win from year 7. On the investment side, 2 % or 6 % a year also reverses the answer. The right reflex is not to bet on one value, but to look at the answer under several assumptions, and see whether it holds.
What the calculation does not say
The calculation compares two amounts of wealth. It ignores everything that cannot be put into figures, and that is sometimes what matters most:
- Discipline. The example assumes the renter really invests €806 every month for fifteen years. A loan, by contrast, is forced saving: you cannot skip a payment. Many renters do not save the gap: the calculation then favours renting on paper, not in the bank account.
- Stability and freedom. Owning means no longer depending on a landlord, fitting out your home as you like, passing it on one day. Renting means being able to leave on one month's notice in France's high-demand areas (zones tendues), and never paying for a façade renovation.
- Concentration risk. Buying often puts most of your wealth into a single property, in a single city, financed on credit. The renter's investment can be spread.
- Tax. In France, the capital gain on your main home is exempt from tax; investment gains are taxed, which the calculation includes. Home-buying support such as the zero-rate loan (prêt à taux zéro) changes the cost of the loan, and so the result.
How to run the calculation for yourself
Three figures are enough to start: the price of a home comparable to the one you rent, your current rent and your down payment. The rent vs buy calculator does the rest, on the same budget, and shows the year buying catches up with renting, if it does. Then change the price, the investment return and the horizon to see whether the answer holds.
Before committing, also check what your budget lets you borrow with the borrowing capacity calculator, and keep an eye on your debt ratio: a purchase that wins on paper but strains the end of every month is not a good deal. Finally, remember that the price assumption is best reasoned in real terms: inflation pushes prices and rents up together, and on its own says nothing about who wins.
This calculation is not advice: it puts your assumptions into figures, and leaves you to decide which ones you believe.
