When it comes to deciding whether to rent or buy a property, there are many factors one has to consider. Each comes with its advantages and disadvantages.
Your situation
Personal circumstances are almost always a determining factor as to whether we rent or buy a property.
This could be anything from employment status, personal relationships, lifestyle choices and family situations such as pets and children.
For example, a job might require you to relocate to a different part of the country within a year or two, so you may prefer not to be tied into a long-term purchase.
In South Africa, there is a strong culture of property ownership. South Africans will generally aim to own at least one property.
European culture, in comparison, owning property is not a substantial part of the culture, due to affordability.
All about the money
Your financial situation plays a crucial role in the decision to rent or buy a property.
It’s not only the cost of buying a property that comes into question, but the additional long-term expenses that come with it.
Such as rates and taxes, maintenance, insurance and other unforeseen costs.
Very often, it is merely more affordable to rent. It may also be a good interim solution while you are building or recently moved to the area so that you can make a more considered long-term investment decision.
Benefits of buying
Owning property is certainly preferable if you can buy without over-extending yourself financially, as it provides the type of safety net renting a property cannot.
If you have chosen to buy a home in a good area such as the North Coast, the plus is that its value should increase over time.
Should you sell the property in the future, you stand to make a profit or at the very least have the same value back in market terms.
A plus that comes with owning a property is that you can rent it out and earn an income from that rental. Owning your property means that you have full control over any building alterations, garden design and general appearance.
Benefits of renting
For a modern lifestyle, renting a property is a far more flexible option. There are no long-term financial commitments, although the rental fee will likely increase by at least inflation each year.
You could potentially rent in an excellent area where it would be too expensive for you to buy.
The homeowner is liable for maintenance, insurance and taxes, whereas a tenant would only be concerned with insurance of the home contents and rates.
When moving out of a rented property, you have no concerns over what happens to the property going forward.
However, you will also have limited creative freedom in terms of making the home your own, without the owner’s permission first. Unfortunately, renting offers no return on investment since the tenant is effectively paying towards the installment on the homeowner’s bond.
Whichever way you look at it, get in touch with an experienced property professional to work through all the available options to determine what will work best for you.
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