One of the biggest dreams that most people have, is to one day own their own home. However, that is easier said than done. Dreams of owning big houses with backyards turned into renting small apartments. The choice between renting a property and buying a property is often a difficult decision to make. Renting a property comes with its advantages and disadvantages, but so does owning a property.
The idea of renting a property is often frowned upon because most people believe that renting is just as good as throwing money in the bin. This is because the money goes straight to the landlord and the tenant is not getting much in return.
When faced with the decision of renting a property, keep in mind that there are both pros and cons.
The pros include:
- More flexibility
Renting a home allows for more flexibility. Renting is ideal for those who move around often, whether it be for work or other reasons. If you don’t intend on staying in one specific place for a long time, renting is the perfect option for you, and it requires no long-term commitment from you as a tenant.
You might not be able to buy a home in your favourite area; however, you could possibly afford to rent a home in your favourite area.
- Moving out
When it comes to moving out, it is easier to do for a tenant than a homeowner. A tenant can easily give a month’s notice or find someone else to take over their lease, and vacate the premises. A homeowner, however, needs to find a buyer to purchase his/her home before they can even think about moving out.
- Homeowner’s insurance
Most of the maintenance work and repairs that need to be done on the property is the owner’s responsibility. Homeowner’s insurance is also paid for by the homeowner. The tenant only needs to insure his/her own personal belongings.
The cons include:
- Lack of freedom
A tenant is required to follow the rules set out in the lease agreement. This could have an impact on the use or renovation of the property. You cannot make any changes to the property without getting the owner’s/landlord’s consent.
- Third party involvement
In most cases, you will have to deal with a rental agent when renting a property. This rental agent will act as the middleman between you (the tenant) and the owner. The downside of this is that issues could take even longer to be resolved.
- No return on investment
When renting a property, there is absolutely no wealth creation or return on investment, as the home will never belong to the tenant. The tenant is basically just paying towards the homeowner’s home loan.
- Rental fluctuations
You as a tenant, have no control over annual rental fluctuations, which are affected by inflation. If you can no longer afford to pay your rent, you will have to find an affordable home, and the homeowner will find a new tenant that can afford the increase in rent.
- No guarantees
Once the lease expires, there are no guarantees that the lease will be renewed, which means that the tenant will have to vacate the premises and find new accommodation.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)