Levelling the field: what "fair" means

To make the comparison fair, the model assumes you have a fixed amount of starting cash. In the Property scenario, this cash pays for the deposit, stamp duty at the additional-property rates (including the 5% surcharge), and legal/survey fees (estimated at £2.5k). If there is any cash left over after these costs, it is invested in stocks alongside the property. In the Equities scenario, the exact same starting cash is invested in index funds from day one. This captures the "opportunity cost" of the cash tied up in a property deposit.

The power (and risk) of leverage

Property's main advantage is leverage. If you put down a 25% deposit, you control an asset 4x your initial investment. A 3% rise in property value is a 12% return on your actual cash (before costs). However, leverage works both ways: it also magnifies your losses and requires you to service the full mortgage interest even if the property is vacant.

Tax and Running Costs

Rental Income: We calculate net rental profit after maintenance, insurance, and interest-only mortgage payments. Since 2020 (Section 24), you cannot deduct all mortgage interest from your rental income before tax; the model applies the 20% tax credit correctly. Reinvestment: The model assumes any net rental profit (after tax) is reinvested into the stock market every month. This ensures property "income" is compounded fairly against stock market returns. Capital Gains Tax (CGT): The model is buy-and-hold-then-sell. Every year before the last shows the paper value while you still own the property, and only the final year applies selling costs and CGT on the gain. Selling costs are deducted from the chargeable gain as well as the proceeds, since incidental costs of disposal are allowable. Choose your CGT band (18% basic, 24% higher/additional); the same rate and the GBP 3,000 annual exempt amount apply to the equities side when you set it to a taxable (GIA) wrapper, so both routes settle up on the same basis. Set the equities wrapper to ISA/SIPP to model shielded gains instead.

Property vs Index Funds Calculator | Buy-to-Let vs Equities

Starting capital

Your available cash

The total cash you have to invest today. In Option A, this funds the deposit, stamp duty and fees. In Option B, the full amount is invested in index funds.

Option A: Buy-to-Let

Property purchase price

Gross monthly rent

Mortgage interest rate

Interest-only is assumed.

Mortgage term

years

Past the term, a remortgage at the same rate is assumed.

Rent growth

Annual rise in rent. Maintenance and tax scale with it.

Property appreciation

Annual growth in value.

Maintenance & costs

Of gross rent (repairs, voids, insurance).

Your income tax rate

Applied to rental profit (Section 24). Rises to 22/42/47% from April 2027.

Selling costs

Estate agent and legal fees on exit, of sale value.

Capital Gains Tax band

Applied to the gain on both routes when you sell.

Option B: Index Funds

Expected stock return

Annualised return (CAGR).

Tax wrapper

A GIA pays CGT on exit, like the property does.

Projection period

years

Nominal figures: not adjusted for inflation.

Estimated Wealth Gap

Property Assets -

Equities Assets -

Spare cash invested alongside -

Adjust the inputs to see your result.

Asset trajectory

Leverage vs compounding

Property (paper value; after CGT at exit) Index Funds

Illustration only, not financial advice. Net worth is the value of your assets minus any debt. Property figures are shown after estimated UK Capital Gains Tax. Stocks are shown gross.

How the model works

Comparing property and stocks is like comparing apples and oranges: here's how we level the field.

Track your total assets, levered or not.

This modeller uses estimates. Omnicogi uses your actual data, tracking property values, mortgage balances and stock portfolios in one place to show your true consolidated performance.

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