Buy vs Rent: A 5-Year Money Audit of My June 2021 W14 Flat Purchase
In June 2021 I bought a 1-bed flat in W14 0RA (West Kensington) for £487,500, with a £270,999 mortgage (£270,000 advance + a £999 product fee added to the loan), 30-year term. The rate journey since then: 1.14% → 4.74% → 3.80%, each fixed for 2 years. Five years on, was it the right call versus renting the same flat and putting the deposit to work elsewhere — a global stock index (S&P 500, MSCI World, or Taiwan’s TSMC-heavy 0050), or a plain 3% savings account?
Equity today (base case)
£299,187
£540k value − £240.8k mortgage
Mortgage payment now
£1,245/mo
@ 3.80% — was £889/mo @ 1.14%
5-yr cash cost: buy vs rent
£82.3k vs £113.9k
Buying was £31.6k cheaper in cash
"Didn't buy" — MSCI World
£341,756
Deposit invested, rent the flat
"Didn't buy" — S&P 500
£371,721
Deposit invested, rent the flat
"Didn't buy" — Taiwan 0050
£425,972
Deposit invested, rent the flat
"Didn't buy" — 3% savings
£220,011
Deposit invested, rent the flat
The Decision — June 2021
Purchase price
£487,500
Mortgage (incl. £999 fee)
£270,999
Cash deposit
£217,500
Stamp duty (SDLT)
£0
Total cash in
~£219,000
Lucky timing on stamp duty: the COVID nil-rate band (0% up to £500,000) ran until 30 June 2021. At £487,500, completing inside that window meant £0 SDLT — completing just a day later under the 1 Jul–30 Sep 2021 rules (0% to £250k, 5% above) would have cost £11,875. That's a real, one-off £11,875 saved purely by timing.
| Item | Amount | Notes |
|---|---|---|
| Property price | £487,500 | 1-bed, renovated 2013, W14 0RA |
| Mortgage advance | £270,000 | Cash applied to purchase |
| Product fee (added to loan) | £999 | Capitalised → opening balance £270,999 |
| Cash deposit | £217,500 | £487,500 − £270,000 |
| Legal / survey / other costs (est.) | £1,500 | Conveyancing, searches, valuation |
| Stamp duty | £0 | Under £500k nil-rate band (to 30 Jun 2021) |
| Total cash deployed at completion | ~£219,000 | This is the "what if invested instead" pot |
The Mortgage Journey — 1.14% → 4.74% → 3.80%
A 30-year repayment mortgage on £270,999. The first 2-year fix at 1.14% (a once-in-a-generation rate) kept payments at £889/mo. The 2023 remortgage landed right at the post-mini-budget peak — +55% to £1,376/mo. The 2025 remortgage to 3.80% brought real relief, down to £1,245/mo — a 9.5% cut.
Monthly Mortgage Payment by Period
Interest vs Principal Paid Per Year
| Period | Rate | Monthly payment | vs prior | Balance at end |
|---|---|---|---|---|
| Jun 2021 – Jun 2023 (24mo) | 1.14% | £889.18 | — | £255,671 |
| Jun 2023 – Jun 2025 (24mo) | 4.74% | £1,375.72 | +£486.54 (+54.7%) | £246,480 |
| Jun 2025 – Jun 2027 (12mo so far) | 3.80% | £1,244.66 | −£131.07 (−9.5%) | £240,813 (now) |
| 5-year totals | £69,293 paid | £39,107 interest / £30,186 principal |
Of every £1 paid to the mortgage so far, 56p was interest and 44p reduced the balance — typical for the early years of a 30-year term, and worse than it would be on a shorter term. The balance has fallen by just £30,186 (−11.1%) in 5 years.
Cash Flow — Buying vs Renting the Same Flat
If you hadn't bought, you'd have needed to rent an equivalent renovated 1-bed in W14 0RA. London rents were unusually depressed in 2021 (post-COVID exodus) and then rebounded hard — roughly +35% from 2021 to 2024, cooling to ~2-3%/yr since. A realistic rent path: £1,550/mo in 2021 → ~£2,200/mo asking today.
| Year | Mortgage rate | Buy: total cost (mortgage+SC+repairs) | Buy: £/mo avg | Rent: £/mo | Rent: annual |
|---|---|---|---|---|---|
| 1 (2021–22) | 1.14% | £13,270 | £1,106 | £1,550 | £18,600 |
| 2 (2022–23) | 1.14% | £13,270 | £1,106 | £1,750 | £21,000 |
| 3 (2023–24) | 4.74% | £19,109 | £1,592 | £1,950 | £23,400 |
| 4 (2024–25) | 4.74% | £19,109 | £1,592 | £2,090 | £25,080 |
| 5 (2025–26) | 3.80% | £17,536 | £1,461 | £2,150 | £25,800 |
| 5-year total | £82,293 | £1,372 avg | £1,898 avg | £113,880 |
Buying won the cash-flow race: over 5 years, owning (mortgage + £2,000/yr service charge + £3,000 total repairs) cost £82,293 vs £113,880 to rent the same flat — a £31,587 saving. But £30,186 of the buy-side spend was principal repayment (equity), so the true "consumed" cost of owning was only £52,107 — well under half of renting.
Where Did The Equity Go? — Property Value Scenarios
W14 0 (West Kensington) flat prices are estimated down ~23.5% in nominal terms since 2021 on the borough sector index — the broad market took a beating from 2022's rate shock. But this specific flat is a fully renovated, modernised top-floor 1-bed, which our companion W14 valuation report puts at ~£540,000 today (+10.8% vs the 2021 purchase price), reflecting a condition premium over the tired/unrenovated stock that drags the sector average down.
Property Value & Equity — Bear vs Base Case
Net Worth Over Time — Buy vs "Didn't Buy"
| Scenario | Value now | vs purchase | Mortgage balance | Equity now |
|---|---|---|---|---|
| Purchase (Jun 2021) | £487,500 | — | £270,999 | £216,501 |
| Bear W14 0 sector index (−23.5%) | £372,794 | −£114,706 | £240,813 | £131,981 |
| Base Renovated-flat valuation (+10.8%) | £540,000 | +£52,500 | £240,813 | £299,187 |
"What If I Didn't Buy?" — Rent + Invest the Deposit
Take the ~£219,000 that went into the deposit + costs and instead drop it into an investment on day one — while renting the same flat. Because renting cost £31,587 more in cash over 5 years than owning did, that extra cash has to come from somewhere — in this model it's drawn down from the investment pot each month, so it's a true apples-to-apples "same income, different allocation" comparison. Four alternative homes for the deposit are modelled: a global tracker (MSCI World), the S&P 500, Taiwan's TSMC-dominated 0050 ETF, and a plain 3% savings account.
5-Year Outcome — Six Paths
5-Year Total Spend — Where The Money Went
| Path | Net worth — Jun 2026 | vs Buy (base, £299,187) | Assumptions |
|---|---|---|---|
| Buy this flat (base case) | £299,187 | — | Value £540k, mortgage £240,813 |
| Buy this flat (bear case) | £131,981 | −£167,206 | Value £372,794 (sector index) |
| Rent + 3% savings account | £220,011 | −£79,176 | 3.0% AER, compounded monthly |
| Rent + MSCI World index (GBP) | £341,756 | +£42,569 | Actual 2021–26 returns, cumulative +75.8% (~11.9%/yr) |
| Rent + S&P 500 (GBP-adjusted) | £371,721 | +£72,534 | Actual 2021–26 returns, cumulative +89.9% (~13.7%/yr) |
| Rent + Taiwan 0050 ETF (GBP-adjusted) | £425,972 | +£126,785 | Actual 2021–26 returns, cumulative +120.0% (~17.1%/yr) |
Headline: all three equity scenarios beat the base-case buy outcome over this specific 5-year window — but by very different margins. MSCI World (+£42.6k) was a strong but fairly "normal" global bull run. The S&P 500 (+£72.5k) benefited from US mega-cap/AI leadership. Taiwan 0050 (+£126.8k) is the extreme case — TSMC's AI-driven boom drove ~+22%, −21%, +27%, +49%, +37% annual swings in TWD, more than doubling even after a ~8% GBP currency drag. Against a boring 3% savings account, buying wins clearly in the base case (+£79k) and only loses in the bear case (−£88k).
Sensitivity — How Much Does The Verdict Depend On Assumptions?
Two numbers drive everything: what the flat is actually worth today, and what return the alternative investment actually earned. Below: the property value at which buying's equity exactly matches each "didn't buy" path (holding the mortgage balance at £240,813), and the constant annual return needed for "rent + invest" to match buying.
Break-Even Property Value vs Alternatives
"Rent + Invest" Outcome by Assumed Annual Return
| Break-even | Property value | vs £487,500 purchase |
|---|---|---|
| Equity = Rent + 3% savings (£220,011) | £460,824 | −5.5% |
| Equity = Rent + MSCI World actual (£341,756) | £582,569 | +19.5% |
| Equity = Rent + S&P 500 actual (£371,721) | £612,534 | +25.6% |
| Equity = Rent + Taiwan 0050 actual (£425,972) | £666,785 | +36.8% |
| Constant return needed to match Buy (base, £299,187) | 9.08%/yr | |
| Constant return needed to match Buy (bear, £131,981) | −6.16%/yr | |
Reading this: the flat only needs to be worth £460,824 (just −5.5% from purchase) for buying to beat parking the deposit in cash savings — a fairly low bar given the £540k base-case estimate. To beat MSCI World it would need £582,569 (+19.5%); to beat the S&P 500, £612,534 (+25.6%); and to beat Taiwan 0050, a huge £666,785 (+36.8%) — none of which look likely given the sector is down since 2021. These equity comparisons are harsh mainly because 2023–2025 was an exceptional run for global, US and especially Taiwanese (semiconductor/AI) stocks, not because property performed unusually badly.
Verdict
| Lens | Result |
|---|---|
| vs renting + 3% savings | Buying was right — +£79k in the base case, only loses (−£88k) if the flat has fallen all the way to the bear-case sector value. |
| vs renting + global equities (actual returns) | Renting+investing edges ahead in the base case across all three index choices — MSCI World (+£43k), S&P 500 (+£73k), Taiwan 0050 (+£127k) — and wins big in the bear case too, but only because 2023–2025 was an extraordinary equity bull market, especially for Taiwanese semiconductors. |
| vs renting + world index (long-run ~7-9%/yr average) | Roughly a wash — at a "normal" long-run global equity return (9%/yr), rent+invest gives ~£298,034, almost exactly matching the £299,187 base-case buy outcome. |
| Cash flow / forced savings | Buying was right — £31.6k cheaper in cash over 5 years, plus £30,186 of "involuntary" equity that a renter would have had to separately save and invest just to break even. |
| Risk & volatility | Mixed — the mortgage payment swing (£889 → £1,376 → £1,245) was a real shock; but a renter faced their own shock (rent +35% by 2024) with zero equity to show for it. |
Bottom line: on the numbers alone, this was a defensible, roughly neutral-to-good decision — clearly better than sitting in cash/savings, and within striking distance of even an exceptional stock market run, while carrying far less volatility than a 100% global-equity (let alone single-country) portfolio. It only looks like a "loss" relative to the single best 5-year stretch for world stocks in decades — and the Taiwan 0050 comparison in particular reflects an extraordinary, hard-to-predict AI/semiconductor boom rather than a "typical" alternative. It does not account for the non-financial value of security of tenure, control over the property (renovations, no rent risk under a landlord), or the forced-saving discipline of a repayment mortgage — all of which favour ownership.
Sources & assumptions: Mortgage amortisation computed on a 30-year repayment basis from an opening balance of £270,999 (£270,000 advance + £999 fee capitalised), with the monthly payment recalculated at each remortgage against the remaining balance and remaining term. Rates: 1.14% (Jun 2021–Jun 2023), 4.74% (Jun 2023–Jun 2025), 3.80% (Jun 2025–present, 12 of 24 months elapsed). Stamp duty: GOV.UK SDLT temporary reduced rates — 0% nil-rate band up to £500,000 ran to 30 June 2021, falling to £250,000 from 1 Jul–30 Sep 2021. Rent path (£1,550 → £2,200/mo) is an estimate for a renovated 1-bed in W14 0RA, calibrated so 2021→2024 growth (~+35%) and 2026 asking levels (~£2,000-2,200/mo) match our companion W14 housing market report. Property value scenarios: "bear" applies the W14 0 sector index (−23.5% nominal, 2021→2026) from that same report; "base" (£540,000) is that report's current valuation for this renovated top-floor flat. World-equity returns: MSCI World Index (GBP, gross) factsheet — 2021: +23.5% (pro-rated for ~7 months held), 2022: −7.4%, 2023: +17.4%, 2024: +21.3%, 2025: +13.2%, 2026 YTD: ~+10% (estimate); cumulative ≈+75.8% (~11.9%/yr). S&P 500 (GBP-adjusted): US calendar-year total returns — 2021: +28.7%, 2022: −18.1%, 2023: +26.3%, 2024: +25.0%, 2025: ~+14% (est), 2026 YTD: ~+8% (est) — converted to GBP using approximate GBP/USD rates at each period boundary (≈1.38 in Jun 2021 → ≈1.345 in Jun 2026, a modest ~2.5% GBP-appreciation drag); cumulative ≈+89.9% (~13.7%/yr). Taiwan 0050 (Yuanta/元大台灣50, GBP-adjusted): TWD total returns approximated at roughly +22%, −21%, +27%, +49%, +37% across 2021–2026 (reflecting the TSMC-driven AI/semiconductor boom and the 2022 correction), with a single ~8% aggregate GBP/TWD currency drag spread evenly across the period (precise year-by-year FX data unavailable); cumulative ≈+120.0% (~17.1%/yr). Both non-World index series are best-effort reconstructions from known historical index/FX levels, not audited factsheet figures. Savings: 3.0% AER, compounded monthly, as specified. Service charge held flat at £2,000/yr; £3,000 of repairs spread evenly across the 5 years for cash-flow purposes. This is a hindsight audit using estimated current values, not a verified valuation or investment advice — actual sale proceeds would also incur estate agent fees (~1-2%) and CGT may apply to the investment scenarios (none assumed here). Consult a financial adviser before acting on any of this.