Rent vs Buy
India 2026

Depends heavily on city, price-to-rent ratio, and how long you'll stay. In Tier-1 cities (Mumbai, Bengaluru, Delhi NCR, Hyderabad, Pune) the rental yield is typically 2-3% — meaning a ₹1 crore flat rents for ₹20-25k/month.

With home loan rates at 8.5-9.5%, the cost of borrowing far exceeds the rental yield, making renting + investing the difference often financially superior over 7-10 year horizons. Tier-2 cities sometimes flip the math because prices are lower relative to rent.

Always run the numbers for your specific city and timeline.

Beyond the EMI: (1) Stamp duty + registration: 5-8% of property value depending on state (Maharashtra 6%, Karnataka 5%, Delhi 6%, Tamil Nadu 7%). (2) Home loan processing fee: 0.5-1% of loan. (3) Society maintenance: ₹3-15/sqft per month. (4) Property tax: 0.5-1% of value annually. (5) Repair/renovation reserves: 1-1.5% of value annually for older flats. (6) GST on under-construction (5% non-affordable). (7) Brokerage if applicable: 1-2%. Total upfront costs can reach 8-10% of property value.

Generally, you need to stay 7-10+ years for buying to beat renting + investing in Indian Tier-1 cities. The math: stamp duty alone is 5-8% of value (a sunk cost paid upfront), and the first 5-7 years of EMI go mostly toward interest, not principal.

If you sell within 5 years, you also pay STCG (slab rate) on any gain. For job mobility scenarios, renting is almost always financially better.

For 'forever home' scenarios in Tier-2 cities or at price-to-rent ratios under 20x, buying tends to win.

Rental yield = annual rent / property value × 100. Indian Tier-1 yields are typically 2-3% (gross), among the lowest globally — driven by speculative pricing and limited rental demand at premium price points.

Mumbai/Delhi: 2-2.5%. Bengaluru/Hyderabad: 2.5-3.5%.

Pune/Chennai: 3-3.5%. Tier-2 cities (Coimbatore, Indore, Lucknow): 4-5%.

For comparison, US/UK Tier-1 cities are 4-6%, Singapore 2-3%, Tokyo 4-5%. Low yield = expensive to own relative to renting.

Your primary residence is consumption first, investment second. The asset-allocation argument: a ₹1 crore flat is concentrated, illiquid, leveraged exposure to one city's real estate market — not great diversification if it's most of your net worth.

The behavioural argument: forced savings via EMI is psychologically valuable. The tax argument: long-term capital gains on residential property qualify for indexation and Section 54 (rollover into another house) exemption.

Net: own a house if it fits your life plan, but don't model it as a portfolio asset that needs to outperform equity.

Yes — we apply Section 24(b) interest deduction (₹2L/year cap on self-occupied property) and Section 80C principal repayment (within the ₹1.5L overall 80C cap) at a 30% marginal tax bracket. For the New Tax Regime, these deductions don't apply (only 80CCD(2) employer NPS does), so toggle to old regime if you'll claim them.

We assume self-occupied; let-out property follows different rules (no ₹2L cap on interest, but rental income is taxable).