Should you rent or buy? How to calculate the break-even point in Malaysia

If you’re deciding whether to keep renting or to finally buy a home in Malaysia, you’re not alone. It’s one of the most common financial questions young professionals and families face. The key to making the right choice is understanding your break-even point — the point where buying becomes cheaper than renting.

This guide explains how to calculate the break-even period, what factors influence it, and how you can run the numbers using simple tools.

1. What Is the Break-Even Point?

In property terms, the break-even point is the number of years you need to live in a home before buying it becomes more cost-effective than renting.

• If you plan to stay for a short period (say under 5 years), renting often works out cheaper.
• If you expect to stay long term, buying usually becomes better after the break-even point.

Think of it as comparing two timelines: the cumulative cost of renting versus the cumulative cost of buying.

2. Renting vs Buying: What Costs Should You Compare?

Renting Costs

• Monthly rent
• Annual rental increases (2–5% is common in Malaysian cities)
• Deposits (usually two months’ rent + utilities)

Buying Costs

• Down payment (normally 10% unless you use SRP financing)
• Monthly mortgage repayments (principal + interest)
• Legal fees and stamp duty
• Loan insurance (MRTA/MLTA)
• Maintenance fees (if it’s an apartment or condo)

3. Step-by-Step: How to Calculate the Break-Even Point

Here’s a simple approach:

1. Estimate renting costs
   • Multiply monthly rent by 12 and project with a small annual increase.
2. Estimate buying costs
   • Add up upfront fees (stamp duty, legal fees, insurance).
   • Factor in mortgage repayments, maintenance, and other recurring expenses.
3. Compare over time
   • Chart the cumulative total for renting vs buying.
   • The year the buying line crosses below renting is your break-even poin Malaysia Monthly Repayment Breakdown Calculator

See More: Malaysia Monthly Repayment Breakdown Calculator

4. Example: RM400,000 Condo in Kuala Lumpur

Renting Scenario

• Monthly rent: RM1,500
• Rent grows at 3% per year
• 10 years = ~RM206,000 paid in rent

Buying Scenario

• Price: RM400,000
• Down payment: RM40,000
• Mortgage: RM360,000 at 4.2% → ~RM1,700/month
• Legal + stamp duty + fees: ~RM15,000 upfront
• Maintenance: RM250/month
• 10 years total = ~RM280,000 (but you own an appreciating asset)

📌 In this case, the break-even point is around year 12. Beyond that, buying becomes financially smarter.

5. Factors That Change the Break-Even Point

• Property appreciation: Faster growth means you build equity sooner.
• Rental inflation: If rents rise faster than expected, buying becomes more attractive.
• Interest rates: Lower rates reduce monthly mortgage costs.
• Government schemes: SRP (Skim Rumah Pertamaku) allows 110% financing, lowering upfront costs.

6. Tools to Help You Decide

Instead of guessing, use calculators to simulate scenarios:

• Loan affordability checker – to see what price range you can afford.
• Monthly repayment breakdown – to understand your mortgage commitments.
• Rent vs buy calculator – to find your personal break-even point.

7. FAQs on Renting vs Buying in Malaysia

Q1. How many years does it usually take to break even?
Typically 8–12 years, but it depends on rent growth and property appreciation.

Q2. Should I rent if I’m unsure about staying long term?
Yes. If you expect to move within 5 years, renting is usually the smarter choice.

Q3. Does SRP really help first-time buyers?
Yes, it reduces upfront costs by allowing 110% financing, which can bring the break-even point closer.

Q4. What if I invest the money I’d save by renting?
If investments outperform property appreciation, renting plus investing can sometimes win.

Q5. Do rising interest rates make renting better?
Higher interest rates increase loan costs, which may push the break-even point further out.