Is Rent Really Dead Money? What a Lease Costs You

"Rent is dead money" is the most repeated sentence in property. It is also the argument that ends most rent-versus-buy debates before the arithmetic starts. It sounds like an accounting fact, but it is a comparison with one side missing.

Here is the missing side. A 99-year lease is prepaid rent with an expiry date on it. You are not buying land in perpetuity; you are buying a fixed number of years of occupation, and every year you live there you consume one of them. That consumption has a price, it is knowable, and almost nobody writes it down.

The identity nobody writes down

If you buy a leasehold flat and hold it to the end of its lease, then the average cost of each year you occupied it is the price divided by the years you got. Not approximately. That is what the words mean.

This is not the usual claim, and it is stronger. It is not a forecast of the flat's value decay; leasehold value does not fall in a straight line, and we cannot publish the table that governs it. This is an identity about the cost of occupation. Buy 43 years for $600,000 and each of those years cost you $13,953, whatever the resale market does in between.

Every row is the same $600,000. Only the number of years being bought changes. The 43-year flat consumes lease at 2.2 times the rate of the 95-year one, and that multiple is not an estimate either — it is 95 divided by 43, and nothing else is in it.

Now compare the right-hand column to what you pay in rent. You know your rent and we do not. The point is to isolate the part of buying that is structurally the same as renting, so you can compare the two figures directly.

What that does to "cheaper per square foot"

Older flats are often cheaper per square foot, larger, and better located. This arithmetic does not take those advantages away. But "cheaper" is doing two jobs in that sentence. A flat with 43 years left is cheaper per square foot and more expensive per year of occupation, on the same price, and both are true at once because they measure different things.

Which one matters depends entirely on how long you intend to stay. If you will sell in seven years, you are not consuming the lease so much as passing it on, and the resale market decides your outcome. If you intend to live there until the lease ends, the table above is not a projection. It is the bill.

The costs that are dead money in both cases

Buying carries costs that never become equity, and they deserve the same scrutiny the word "rent" gets. On that same $600,000 flat, bought by a citizen as a first property:

None of that is an argument against buying. It is an argument against bad framing. Money spent on interest and duty is just as gone as money spent on rent, so a comparison that ignores them is not a comparison. The honest version puts lease consumption, interest and duty on one side, rent on the other, and looks at the difference.

What renting actually buys

Renting buys three things the dead-money argument ignores. First, no stamp duty — nothing on the way in, against $12,600 here and far more on a second property. Second, no lease consumption, because you are not holding a wasting asset. And third, the ability to leave, whose value becomes obvious only when you need it: a job in another country, a marriage, a marriage ending, a parent who needs you nearer.

What it does not buy is a fixed housing cost. Rent is repriced at every renewal and you carry that risk for as long as you rent, which is the strongest thing the buying case has and is usually stated far less confidently than "dead money".

Where buying has the edge

Three places, and they are worth stating precisely rather than as a mood.

A fixed cost against an unfixed one. A mortgage on a fixed schedule is a known number for its term; rent is not. Over twenty-five years that asymmetry compounds in the buyer's favour in most scenarios, and it is the single best argument for buying early rather than optimally.

Leverage that renting cannot access. A 75% loan means a 25% deposit controls the whole asset. That cuts both ways and is not free, but no landlord will lend you three-quarters of a flat to live in.

Forced saving. Every principal repayment is money you did not spend. This is a behavioural advantage, not a financial one. It works even if the buyer is not disciplined.

What this does not mean

This does not mean renting wins. It means the comparison has four terms, not one, and that a single slogan cannot do the work of a spreadsheet.

It does not mean old flats are bad value. The per-year figure is high precisely because the price is low relative to a newer flat, and for a buyer who wants space and location over duration that trade can be exactly right.

And it does not mean the table is your answer. It is one term. Your rent, your holding period, your rate and — for an older flat — the financing pro-rating that lease decay triggers all belong in the same calculation.

What this audit found in our own tools

Every guide in this series checks the tools it links. Our rent-versus-buy calculator models the comparison the conventional way — rent against mortgage, with appreciation and opportunity cost — and it does that well. What it does not carry is a leasehold term. There is no field for remaining lease, so the flat is modelled as though the years were unlimited, which is right for a freehold market and wrong for this one.

This is a scope gap, not a miscalculation, and a narrow one. For the short holding periods most people model, resale price is the dominant factor and the lease term barely moves the answer. It matters at the other end, for the buyer who intends to stay, and that is exactly the buyer this guide is for. It is recorded for the tool's next review as a limitation, not a defect.

Run your own numbers

The division this guide turns on takes ten seconds, but the rest is worth modelling. Our rent versus buy calculator handles the conventional comparison, the mortgage affordability calculator tells you what the income gates allow, and the Singapore stamp duty calculator prices the duty that never becomes equity.

This is general education about how the arithmetic works, not personalised financial advice. Whether renting or buying is right for you depends on your circumstances, your holding period and rates that change; the figures here are worked examples, not a recommendation.