Conventional wisdom says it is better to buy than rent so you can build up equity in the property for future security.
But before leaping to buy a house – any house – consider some of the benefits of renting a house.
When is renting a house better than buying?
Top Benefits of Renting a Home
There are benefits from renting a house rather than investing in property:
- You don’t need as much start-up capital to live independently in a rented house.
- Your monthly living costs can work out cheaper in rented property.
- Rented properties are easier to clean and keep because you only rent as much space as you need.
- You can move quickly if you get a better job offer with less fuss and expense.
- You are not responsible for property maintenance, and you won’t wipe out your savings with a house-related emergency.
- You are free to pack up and travel the world without any property worries.
- If you don’t like the neighborhood, it is straightforward to move locations.
- You can get practical experience of different types of housing for livability and comfort.
- You don’t get weighed down by stuff like kitchen appliances and furniture unless you opt for unfurnished accommodation.
- You can live in a nicer neighborhood – when you buy, your budget restricts your neighborhood options.
- You can afford better quality accommodation with less stress about the décor and furnishings.
- You can save and invest your money because you don’t have an endless stream of property-related expenses.
- You can opt to live close to your work and save commuting time and expense.
- You have more leisure time for fun activities rather than property chores.
- Long-term loans and interest payments don’t weigh you down with financial commitments.
- You get to meet a series of new neighbors and broaden your circle of friends.
- You can try out living with a partner for compatibility without property strings and worries.
These house rental tips and checklists ensure you maximize the benefits of staying in a rented house and minimize the mistakes that renters usually make.
Cons of Buying a House
Although owning a home gives you a capital asset, there are downsides to buying a house rather than renting:
- Higher upfront costs – buying a house is significantly more expensive than renting. You have a deposit, legal fees, removal fees, necessary refurbishment, or hiring an architect for remodeling, and furnishings. All these costs drain your savings.
- Unexpected and expensive repairs – in a rented property, if your pipes burst, the landlord sorts it out and may find you alternative accommodation. When you own the house, and something goes wrong, you need to fund the repairs.
- Higher running costs – when you own a property, you have all the expenses of running that property, including maintaining the HVAC and humidifier systems.
- Less leisure time – property ownership is time-consuming. You have wood to protect, gardens to maintain, and regular tasks to keep your property in good condition.
- Lack of mobility – in a rented property, you can move if you don’t like your neighbors or the area. The process of moving when you have a house to sell is more complicated.
- Vulnerability – a house is a significant proportion of your wealth, and you can lose it to a natural disaster like a fire or flood. Insurance minimizes your monetary risks, but you face more of a loss with the property you own than as a tenant.
- Increasing interest rates – experience indicates that interest rates can rise exponentially and increase your outgoings to unreasonable levels.
- Negative equity – through no fault of yours, house prices in an area can drop rapidly, leaving you with a loss on your house and trapping you in one place until you pay off the mortgage.
- Loss of home and equity – if you lose your job and can’t keep up with the mortgage payments, you can lose your home and investment.
Most of the cons of house ownership relate to a potential loss of monthly income and capital investment. You don’t face this loss with a rented property because you don’t have the possibility of creating personal wealth.
Plus, you avoid costly mistakes that homebuyers typically make.
When is Renting a House Better for You?
There are plenty of situations when renting a house is better than buying a house. They include:
When Abroad for a Few Years
Living and working in another country is a wonderful experience, but if you are only going to be there for a few years, it is probably not worth buying a property.
The benefits of renting a house when working abroad are:
- You don’t have to understand foreign property tax and regulations.
- You don’t commit to a single neighborhood but can move to find your ideal living space.
- You spend the minimum amount necessary on your accommodation and can use the rest of your income to save or explore your surroundings.
- When the job ends, you can pack up and move on with minimal effort.
While Studying and Learning
Many people experience independent living when leaving home to attend university. A small percentage of parents opt to buy their offspring a house to live in, but this is rare.
It makes sense to rent a house at this stage in your life because:
- Funds are tight, and renting is cheaper.
- You get to share with your peers.
- When studying ends, you are probably going to get a job in a different location.
Flying the Nest and Finding Your Feet
Most people move out of the parental home and into a rented house – with or without other people.
In many ways, this is a sensible move into independent living because it takes time to build a career and amass the funds necessary for buying a house.
It also gives more flexibility for seeking job opportunities and trying out different neighborhoods and companions.
You learn how to live independently without the crushing responsibility of property ownership.
Moving Within Five Years
Some careers necessitate packing up and moving on a semi-regular basis.
The initial cost of buying property is expensive. Most people don’t see an increase in their equity sufficient to cover their additional expenses until after a minimum period of five years.
There are exceptions, but generally, property ownership is likely to be more burdensome than profitable if you intend to move jobs and districts every few years.
Lack of a Deposit
Until you have the funds to buy a house, homeownership is not an option, and renting is your only viable way of putting a roof over your head.
It is also an opportunity to start saving for a future property investment if your ultimate goal is to buy a house.
Alternative Investment Strategy
Although most people regard owning their home as an equity investment in their family’s future, it is not the only way of building financial security.
In many cases, a house requires a constant flow of investment to maintain its value.
Using funds that you would use to redecorate, change carpets, and remodel to invest in assets that appreciate with minimal additional investment may be more rewarding than house ownership.
Suppose you run the numbers carefully and take all the additional annual and monthly costs of homeownership into account.
In that case, you may discover that living in rented accommodation costs appreciably less than buying your property.
Ultimately property ownership means a mortgage-free life in the future, but depending on your current income levels, renting may be a lot cheaper than buying.
Freedom from Responsibility and Worry
Renting is less restrictive on your mental energy than buying a house. A tenant does not have to worry about preserving the structure of the house, routine maintenance, and house prices.
Renting a home is better than buying if you simply want somewhere to sleep at night and store your possessions.
Your leisure time is free for you to do the activities that bring you joy rather than property care and maintenance.
Meeting New People and Exploring New Places
Renting a house is better than buying if you enjoy having new neighbors and exploring new places. You can opt for a short-term tenancy and move regularly.
Moving when you own property is stressful but moving from one rented property to another is straightforward. Because a house is not pinning you in place, you have the freedom to explore and experience city life to the full.
Better Quality of Life
You may never be able to afford to buy a house with a sea view, but you can probably afford to rent one for a few months or a year.
Living in rented properties lets you try out different qualities of accommodation. You can choose to live in extraordinary places and learn from the experience.
You may dream of living by the sea, but on a cold weekend with the wind rushing in, you may find that dream less appealing.
That is the huge advantage of renting property – you can try a lifestyle on for size without committing to it.
To Rent or To Buy a House?
Many people feel that they rent because they can’t afford to buy and that buying is the best option.
You can look at renting as a choice that makes sense for you at certain stages in your life. Renting can be the better option for young people, retirees, students, new couples, and busy professionals.
Renting instead of buying allows you to explore and experience more variety and living styles. Renting can represent freedom and choice, whereas house buyers take on property ownership burdens and chains.
Always ask the appropriate questions when renting an apartment or a house to maximize the benefits that renting can offer you.