Rent vs buy in Bangalore: how to compare the costs

3.18.1 What does rent vs buy mean, and what can this guide tell you?

Rent vs buy means comparing your wealth at year 10 if you rent against your wealth at year 10 if you buy the same home, on the same monthly budget. This guide gives you the method: every cost to list, a worked example with a sensitivity table, and the tax rules that change the result. It does not tell you to rent or to buy. Sachi is an AI home-buying advisor, not a licensed financial adviser, and this guide is not financial advice. Rework the example with your own rent, flat price and growth assumptions, since a stranger’s numbers will not match your situation. The comparison also depends on facts outside money, such as how long you plan to stay in Bangalore; read the non-money factors further down before you decide anything.

Two mistakes make this comparison wrong: comparing only EMI against rent, which leaves out stamp duty, GST, maintenance, property tax and the return you give up on your down payment; and guessing a property appreciation rate or a rent growth rate from a brochure or a feeling. This guide labels every number as a sourced fact, with its source, or an assumption you must change.

3.18.2 What does it cost to buy a flat in Bangalore?

Buying a flat has one-time costs and yearly costs, and most calculators miss several of them. The one-time costs are the down payment, stamp duty, registration fee, GST (for an under-construction flat) and interiors. The yearly costs are the EMI, property tax, maintenance and the opportunity cost of the money you put down. Many online calculators show only the EMI, so the monthly figure they show understates the true monthly cost of owning the flat; add the yearly costs and divide by twelve to see the full cost beyond the bank’s instalment. The flat cost sheet guide lists every line a builder can add to your cost sheet; read it alongside this guide before you sign a booking form. Each cost below names its primary source, or is marked as an assumption you must change.

Cost	Rate	Source
Down payment	Assumption in this guide: 25% of the flat price	Lenders set their own loan-to-value limit; Sachi could not open the RBI Directions PDF this session to confirm the exact slabs, so this guide treats the share as an assumption, not a cited rule
Stamp duty	5% of market value	IGR Karnataka stamp duty table
Additional duty	10% of the stamp duty	Karnataka Stamp Act, 1957, section 3B
Registration fee	2% of market value	Gazette notification RD/46/MNMU/2025
GST (under-construction only)	5% of total amount (non-affordable), 1% (affordable)	GST Council FAQ, 7 May 2019
Interiors	Assumption, no source	You set this

The down payment has a hidden cost beyond the cash itself: the return you give up by not investing that money elsewhere. Banks set a loan-to-value limit that falls as the loan size rises, so a costlier flat needs a larger down payment share; Sachi could not open the RBI Directions document this session to confirm the exact slabs, so check your own lender’s limit before you plan the down payment. The home loan eligibility guide covers loan-to-value in more detail. Call the down payment, plus stamp duty, registration fee and GST, your “locked capital”: money that could sit in another investment instead. Sachi does not know your expected return on that alternative, so the worked example below treats it as an assumption you must set.

The EMI depends on the rate a lender actually quotes you. ICICI Bank’s own home loan rates page states a salaried rate of “8.75% to 9.90% p.a.” for loans above ₹75 lakh, checked on 12 October 2026, “linked to repo rate”, with the repo rate listed as “5.50%” effective 8 October 2026 (the RBI raised it by 25 basis points at its meeting of 5 to 7 October 2026). That rate was valid only till 31 October 2026 on the page Sachi checked, so get your own lender’s current quote before you plan your EMI. This guide’s worked example uses the lower end of that range, 8.75% p.a., over a 20-year (240-month) tenure, matching the home loan EMI calculator guide, which gives the full EMI formula and more rate scenarios.

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3.18.3 What does it cost to rent the same flat?

Renting has three costs: the rent itself, a security deposit, and moving costs. Rent rises each year, but Sachi found no official series that forecasts Bangalore rent growth, so you must set that number yourself. The security deposit in Bangalore is a market practice, not a fixed amount by law. Sachi checked the Karnataka Rent Act, 1999 (Act 34 of 2001) for a deposit cap: sections 11(2)(b), 16(2), 28(2) and 32(3) deal with construction-financing advances, rent receipts, refunds of advance rent, and a ban on “premium or pugree” at sub-letting, and none of them caps an ordinary security deposit. The phrase “security deposit” does not appear in the sections Sachi read. Sachi’s reading is that the deposit amount in Bangalore is set by negotiation between landlord and tenant, commonly quoted in the market as several months of rent, with no legal ceiling found in this Act.

The Model Tenancy Act, 2021 is a Union government template for states to adopt, not a law that applies on its own. Sachi could not open the Ministry of Housing and Urban Affairs page this session to confirm whether Karnataka has adopted it, so this guide states no deposit cap from that Act. If your tenancy agreement names a specific cap in Karnataka law, that clause needs its own check.

Cost	How to treat it	Source or status
Monthly rent	Assumption: use a signed rent for a similar flat, not a listing price	You set this; see the rental yield guide for how to collect comparable rents
Rent growth each year	Assumption: no official forecast found	You set this
Security deposit	Market practice, several months of rent; no cap found in the Karnataka Rent Act, 1999	Karnataka Rent Act, 1999, sections checked: 11(2)(b), 16(2), 28(2), 32(3)
Moving costs	Assumption: packers, brokerage, overlap rent	You set this

3.18.4 How do you compare buying and renting at year 10?

Compare the two choices by wealth at year 10 on the same budget, not by total cash spent, because a cash-only total ignores two things: the buyer owns a home, and the renter still has the money not spent on a down payment. Give both households the same outflow each month: the buyer’s EMI, maintenance and property tax. Buyer wealth is the home’s value at year 10 minus the loan still outstanding. Renter wealth is the down payment and one-time costs (stamp duty, GST, interiors), less the rent deposit and moving costs, invested elsewhere, plus each month’s owning cost minus rent, invested, plus the deposit returned. If rent is higher than the owning cost in a month, the renter takes the difference out of the investments. Both sides need an assumption you must set yourself and label: a home price growth rate for the buy side, and a return on other investments for the rent side.

The EMI itself is a known formula: monthly EMI = loan × r × (1+r)^n ÷ ((1+r)^n − 1), where r is the monthly interest rate and n is the number of months. Work through this by hand with a spreadsheet, using the EMI formula above and the cost tables in this guide. This guide tests three labelled home price growth cases, 0%, 4% and 7% a year, and holds the loan rate at 8.75%, the opportunity-cost return at 7% a year, and every other cost at the figures in the tables above; change any of these before you trust the result for your own decision, since this is not advice and Sachi is not a licensed financial adviser.

3.18.5 What does the year-10 comparison show?

Take a ₹1.5 crore flat and a ₹2 crore flat, each with a 25% down payment and an 8.75% loan over 20 years. The EMI is about ₹99,400 on the ₹1.5 crore flat and about ₹1,32,600 on the ₹2 crore flat. Assumption: the rent is 3.6% of the price a year, the same gross yield as the ₹30,000 rent on a ₹1 crore flat in the rental yield guide. That gives ₹45,000 and ₹60,000 a month. At 0% and 4% a year home price growth, the renter, who invests the down payment and one-time costs at 7% a year, ends ahead in both examples. At 7% a year, the buyer ends ahead, by about ₹6 lakh on the ₹1.5 crore flat and about ₹8 lakh on the ₹2 crore flat. A higher investment return than 7% moves the result toward renting, and a lower one moves it toward buying.

Home price growth (Assumption)	₹1.5 crore flat: buyer wealth	₹1.5 crore flat: renter wealth	₹2 crore flat: buyer wealth	₹2 crore flat: renter wealth
0% a year	₹70,67,340	₹2,09,60,094	₹94,23,119	₹2,79,71,872
4% a year	₹1,42,71,004	₹2,09,60,094	₹1,90,28,005	₹2,79,71,872
7% a year	₹2,15,74,610	₹2,09,60,094	₹2,87,66,147	₹2,79,71,872

Source: Sachi’s own calculation, 12 October 2026, with the facts and assumptions above (down payment 25%, loan rate 8.75% over 240 months, loan balance at year 10 of ₹79.3 lakh and ₹1.06 crore, rent ₹45,000 and ₹60,000 a month growing 5% a year, investment return 7% a year, maintenance ₹6,000 and ₹8,000 a month, property tax ₹18,000 and ₹24,000 a year, interiors ₹6 lakh and ₹8 lakh, GST 5% for an under-construction flat). Renter wealth does not change across rows, since it depends on the investment return assumption, not the home price assumption. In this run, renting and investing is ahead at 0% and 4% a year in both examples, and buying is ahead at 7% a year. Change the growth rate, the opportunity-cost rate or the loan rate and this table moves; treat it as the method, not a finding about Bangalore.

3.18.6 What non-money factors should you also weigh?

Money is one part of the decision, and the worked example above does not capture the rest of it. A few factors do not reduce to a number in any table, and only you can weigh them against your own life for the next ten years. Two different buyers with identical worked examples can still make different, equally reasonable choices, because their circumstances outside money are not the same. Check how many of the points below apply to you before you act on the totals in the table above. None of them has one right answer that Sachi can give you; each depends on your job stability, your family situation and how long you expect to live in this city.

Sachi’s reading:

• Renting gives more flexibility if your job, city or family situation can change in the next few years.
• Buying can matter more if your children are in a school you do not want to change, since address stability affects school admission in many cases.
• An under-construction flat ties up money years before you can move in; a ready flat does not. The under-construction vs ready-to-move guide compares this directly.
• Owning removes the risk of a landlord asking you to vacate, but adds the work of maintaining the flat yourself.
• A loan EMI is a fixed commitment for years; rent can be renegotiated or ended with notice.

3.18.7 How does tax change the result?

Tax can reduce the cost of a home loan, but only under conditions you must check, and the rule changed on 1 April 2026. For tax years starting on or after that date, the Income-tax Act, 2025 applies. Section 22(2)(a) allows a deduction of up to ₹2 lakh a year on home loan interest for a self-occupied flat, under the old tax regime, if the flat completes within five years from the end of the tax year of the loan and you hold the lender’s interest certificate. If either condition fails, section 22(2)(b) cuts the limit to ₹30,000. The matching rule in the Income-tax Act, 1961 was section 24(b), which still applies to tax years that began before 1 April 2026. The home loan tax benefit guide covers both Acts and the principal deduction under section 123 (previously section 80C) in full.

The new tax regime removes this deduction for a self-occupied home. Section 202(2)(a)(v) of the Income-tax Act, 2025 removes the section 22(1)(b) interest deduction when the new regime applies, and that regime is the default under section 202(1) unless you choose otherwise. Check which regime you will file under for that tax year before you add any tax saving to your comparison; a saving that applies only in the old regime is not money you can assume.

Item	Old regime	New regime (default)
Self-occupied home loan interest	Up to ₹2,00,000 a year (s.22(2)(a)), or ₹30,000 if conditions fail	Not allowed (s.202(2)(a)(v))
Principal, stamp duty, registration	Up to ₹1,50,000 with other items (s.123)	Not allowed (s.202(2)(a)(xii))

Renting has no matching loan-interest deduction, since there is no loan. If your employer gives House Rent Allowance, that exemption is a separate rule not covered in this guide.

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3.18.8 What should you check before you run the numbers for your own flat?

Check these items before you trust any rent vs buy result for your own decision. Each one is a place where a brochure, a broker or a default calculator number can differ from what you will actually pay. Spend an afternoon on this list before you sign anything, since one wrong number changes the final comparison by a large amount. None of these checks costs money, and most take one phone call or one visit to a government portal. Do them in the order below, since the home loan rate and the comparable rent move the total the most. Write down each answer with the date you checked it, since a rate or portal figure can change before you sign.

1. Get the lender’s actual quoted rate in writing, not an advertised headline rate. ICICI’s own page lists 7.55% only for a customer with a pre-approved digital offer, separate from its 8.75% to 9.90% standard salaried range.
2. Get three to five signed rents for similar, finished flats near the project, from local property managers, not listing prices. The rental yield guide explains this step.
3. Get your project’s actual maintenance rate and billing basis from the builder in writing, since no law fixes this amount.
4. Check your own property tax using the BBMP/GBA tax portal method in the property tax guide, since no single per-square-foot rate applies citywide.
5. Confirm with a chartered accountant which tax regime you will file under, before you count any interest deduction.

Red flag: a cost sheet, broker pitch or online calculator that compares only EMI against rent, with no stamp duty, GST, maintenance, property tax or opportunity cost. That comparison is incomplete, whichever way it points.

For a resale flat, the main change to this method is GST. The GST Council FAQ excludes a sale from GST when the full price is paid after the completion certificate or first occupation, whichever is earlier, so a true resale flat usually has no GST line. Drop that line from the one-time costs; the rest of the method, including stamp duty, the registration fee, the home loan rate, maintenance and property tax, stays the same. A resale flat can also let you move in sooner, which changes how many years of rent you avoid paying. A full guide for resale buyers is coming soon.

To check a specific project’s price, builder track record and K-RERA status before you run your own rent vs buy numbers, Ask Sachi.