While owning a home is traditionally every Indian’s ambition, skyrocketing real estate costs, particularly in metro areas, have caused many people to choose to rent rather than to buy. The decision between renting and buying puts an individual or family in a difficult situation considering the financial strain. It has been noted that those who can afford a home tend to value home ownership more, with renting serving as a common middle ground. Both options have distinct advantages and downsides. Renting vs. buying has different expenses depending on where you reside and the housing market there. It’s not just about ownership, it may also be a lifestyle decision.
Deciding whether to buy or rent is a significant choice that impacts your financial situation, way of life, and personal objectives. Depending on your lifestyle and financial position, you can select any one of the options. Both require a consistent source of income and may also take some effort to maintain.
Decision-making is simple if you are clear about your needs. For instance, if you can afford it and want to live somewhere for a very long time — say, 10–20 years — having your own home makes sense. You can contrast your rental expenses with EMIs. However, renting is preferable if your job necessitates constant relocation. Renting also enables you to have a low-cost place to live, freeing up your income for investments and wealth accumulation. It’s challenging to buy a house for a short time and sell it when you move.
Compared to the pre-pandemic era in 2019, the demand for residential rental homes in India’s top seven cities has surged by 10%–20% in 2022. We are looking at 21 million households out of a total 70 million if we believe the census statistics that 30% of urban households are renters inside the 31% official urbanisation rates. According to a Knight Frank analysis, there would be an additional 37 million renters if we considered the additional 32% of unexplained urbanisation based on satellite data at 50% rental. The share of rentals and the demand for the rental business will rise as a result.
The need for rental housing is anticipated to be strong, particularly in the managed housing market as businesses encourage their staff to work from the office to increase productivity. Regardless of the state of the real estate market, rentals typically experience growth and traction.
The most pervasive misconception about renting is that you waste money every month. That is untrue. You must remember that having a place to reside always involves some sort of financial outlay. Renting gives you complete control over your monthly housing expenses. Your lease specifies this sum so you can make appropriate plans. In rare situations, if you reside in a large apartment your landlord might also include homeowner association (HOA) dues, storage fees, and utility charges in that sum.
Here are some attractive benefits of choosing your own home:
Flexibility: Flexibility in terms of a variety of factors, including where you want to live, how much rent you want to pay, and how easily you can move across the world without having to worry about fixed costs. While owning a home may limit your mobility options, if you move, you won’t have to worry about finding a new place to live or the expense of your furniture when you return.
Ease of relocation: Before moving, a homeowner must sell their current residence. In some instances, this could take up to a year or longer. However, the majority of renters only sign one-year leases. Most of the time, the tenant can end the lease by giving the landlord notice of at least one month.
No property taxes: Since you don’t receive the bill, you don’t pay the property taxes. But since your landlord might pass this expense along to you, you still wind up footing the bill. And if you decide that your landlord is giving you too much information, you may always leave to start over.
Low upfront expenditures: Purchasing a house comes with a number of upfront costs that could strain your finances. In contrast, you might need to pay a security deposit and a few months’ worth of rent upfront if you rent a home.
Renting is a preferable choice for people who want to avoid the difficulties related to buying, the costs of upkeep, and property taxes. However, look at renting and purchasing from a long-term perspective. Purchase when you are confident that you will stay put and have the necessary savings, credit, and income stability.
The writer is Founder & CEO, NestAway Technologies.
