Renting vs Buying a House: Pros and Cons

Buying a house has been one of the biggest decisions in the life of everyone who is earning, whether salaried or a businessperson. To secure a roof over one's head people bury their dreams and desires to invest in a location of their choice and as per their budget. The millennial generation that always scrutinizes every financial decision always believes in weighing their options before making a choice. Is it worth investing in a house or going for rental properties?

Here is a handy guide at the pros and cons of buying vs renting a home which will help you make an informed decision about what to choose.

Advantages of Buying a Home

• Owning a home allows you to get security, equity and growth in personal wealth.
• A home value always shows appreciation which is why when you decide to sell it in the future, you earn a profit over the original price that you had purchased it for.
• You become the legal owner of your property which allows you to use it with freedom as opposed to a rented property that always has restrictions enforced on it.
• A homeowner can decorate their home as per their tastes and choices. The property can be altered including decor changes, renovations, landscaping to suit one's needs and styles.
• Credit score gets a boost when repayments are made on time as a homeowner.
• Buying a property allows the opportunity to save money as there are possible tax deductions for homeowners who have loaned an amount to fund a property.

Disadvantages of Buying a Home

Being a Homeowner comes with huge financial accountability including EMIs and regular maintenance as opposed to going for rental properties.
There are additional costs to home-ownership and these include maintenance, rates, taxes and insurance for which the homeowner is solely responsible and answerable.
During the times of recession or high-interest rates, a property in a particular location may become undesirable which can put the homeowner in trouble. Rental properties pose no such risk.
A homeowner has less mobility in comparison to a tenant. A tenant can leave a property after serving the notice period as mentioned in the agreement which maybe more or less the same for most rental properties. A homeowner is dependent on selling their home before buying or renting a new home which limits their ease of movement.

Advantages of Renting a Home

• If you do not intend to live in a place for a long time then opting for houses for rent is better than investing in a house. This situation is befitting for someone who has a transferable job. Renting a home is, therefore, more flexible than owning a home.
• A tenant can live in an area which may be unaffordable as a homeowner. All that is required is a signed contract which doesn't exceed 11 months and advance deposit. That is the biggest advantage of choosing rental properties over buying a home.
• Moving out of a rented property is easy for a tenant after they serve the notice period. They are also spared of the burden of finding another buyer to purchase the property as this is the responsibility of the owner.
• The tenant is not responsible for any maintenance work on the property as it is the sole responsibility of the owner.
• After paying the rent, a tenant has additional money that can be utilized to buy a house or invest elsewhere like in stocks. They do not have to fret over arranging for funds for investing in a house. Rental properties that way will ease the burden off your shoulders.

Disadvantages of Renting a Home

• A tenant is bound by the legal terms and conditions of the lease agreement which restricts their freedom to use or renovate the property as per their tastes or needs.
• The consent of the homeowner needs to be sought before the renovation of the property.
• Houses for rent offers no wealth generation or return on investment since the property will never belong to the tenant. Instead, the tenant is paying toward the homeowner's loan. Thus there is no guarantee fixed wealth generation.
• Inflation affects the annual fluctuation rates which will directly affect you and force you to pay rent as per the behaviour of the market.
• There is no guarantee of an extension of the lease period. If the homeowner finds a tenant who is paying more rent or follows their terms and conditions then you may be asked to vacate as mentioned in the agreement. This seems to be the biggest disadvantage of rental properties.
• When the tenant retires and stops earning a regular salary, it may become difficult to arrange for large amounts of money to pay the rent.

Young people are wanting to buy property to invest in a solid investment. An average individual changes their mind as to whether they should buy a home after every five or seven years.

Young professionals are investing in property for a solid investment as opposed to choosing apartments for rent. The purchasing power has increased so has the government announced measures to make affordable housing a reality.

Real estate is an actual illiquid asset which will build equity and boost its value over time also offering tax benefits which will make a house a source of income and meld into the local community life. It pays to take the leap of faith and invest in a home to structure the family and social life. It also instils the pride of ownership and a sense of security.

Houses for rent on the other hand give you the freedom to move but won't give security in the long run.

The ball is in your court. Weigh the pros and cons and make sure that you make the best decision for yourself.