Buy or Rent? The 20x Rule Answers in 60 Seconds

The 20x rule compares a property's price to its annual rent. If the price is more than 20 times the yearly rent, renting is likely smarter than buying. Here's how to use it in India.

Here's what happened: The price-to-rent ratio divides a property's market price by its annual rental value — a ratio above 20 signals renting is cheaper long-term.. In most Indian metro cities like Mumbai and Bengaluru, price-to-rent ratios routinely exceed 30-40x, strongly favouring renters over buyers.. The rule does not account for home loan EMIs, property appreciation, tax benefits under Section 24(b), or emotional ownership value — all critical in India..

What you should do: Calculate now: divide the property's asking price by 12 months of comparable rent — if the result exceeds 20, seriously reconsider buying.. Compare your EMI vs rent: use GoCredit's EMI calculator to check if your monthly home loan cost exceeds current market rent for the same flat.. Factor in hidden buying costs — registration (5-7%), stamp duty, maintenance, and society charges can add ₹5-10 lakh upfront to any purchase decision..

Section 24(b) lets you claim up to ₹2 lakh/year in home loan interest as tax deduction — subtract this annual saving before comparing EMI vs rent costs.