The Freedom of Renting: 5 Reasons to Rent Instead of Buy
It is a question as old as time: should you continue renting or should you consider buying? Both of these options have their own pros and cons but people are too quick to point out the negatives when it comes to renting.
You might have heard golden pieces of wisdom like the rental amount you pay could contribute towards a bond. Or, that it makes no financial sense to pay off someone else's bond.
Whilst these are valid points, no one seems to be talking about the benefits of renting. Here are a few reasons why renting might be the best option for you.
1) The upfront costs are less when you are renting
If you rent a property, the only upfront cost that you have to pay is the deposit. This is generally the value of 1-2 months' rent. If the landlord is satisfied with the condition of the rental unit when your lease is up, they will return this amount to you.
However, if you are buying a property, there are so much more costs that you will have to cover. Firstly, the financial institution which you'll get the home loan from will require a deposit. Secondly, you will have to save up for the bond registration and transfer fees. Then there are several other fees you will have to pay like utility bills and home insurance.
2) There is a fixed rental amount
One of the benefits of renting is that there is a fixed rental amount throughout the year. This amount is determined by the landlord and stipulated in the rental agreement. Some landlords push their rent up in the next year but this will then be stipulated when a new lease agreement is signed.
This is unfortunately not as easy when owning a house. The mortgage payments per month can fluctuate as the interest rate shoots up or goes down. It is not as stable as the rental amount paid to a landlord.
3) You have less maintenance to worry about when renting
Homeowners have constant maintenance and repairs to worry about. Burst pipe? Broken windows? Electric gate malfunctioning? That's the homeowner's responsibility to fix and ongoing maintenance usually costs quite a bit to fix.
Renting allows the tenant to simply live without worrying about repairs and maintenance. If something breaks, the landlord is notified and they need to ensure that it is repaired.
Having said that, make sure that you read through the rental agreement to confirm that your landlord is 100% responsible for all repairs and maintenance. There might be a few things that fall on the tenant's shoulders, too.
4) You have more freedom to move when you rent
If you rent you aren't bound to a single property for the next 20 to 30 years. You are free to pack up and leave whenever you want. This way you can focus on building your career or immigrating to another country without worrying about leaving a valuable asset behind (or needing to sell it first).
You also have more flexibility in terms of where you can live. Buying a home in Umhlanga Rocks, for example, is often not an option for many people but renting a unit there is totally possible.
5) It is easier to downsize if you are renting
Tenants who decide to move to a smaller unit at the end of their lease can do so with ease. All you have to do is decide which type of rental unit you want, start your search, and move in. If you are a homeowner and you decide to downsize, it is not as easy as that.
You have to put the house up for sale and then wait for someone to actually buy it. Then there are several costs associated with selling the house and you have to wait for the transfer to be approved before you can move.
There is also the question of renovations. If you have spent thousands on renovations over the years, you might not cover those costs during the sale of the house.
Final thoughts
It isn't always a good idea to have all your eggs in one basket, especially in this uncertain economy. Things simply aren't the same as they were 50 years ago when people were sure of their property investment. Renting is often the best way to become independent and afford a living space that you can call your own.