Renting vs Buying: which is more advantageous? This question has crossed the minds of many of us. At first glance, it seems straightforward – owning your own home is better than moving around rental apartments your whole life. However, obstacles often arise on the path to acquiring real estate, such as a lack of funds. Nevertheless, there are plenty of different financing options available that allow you to pay for desired housing over 10–20 years.
Have you made the decision to buy your own home? Let’s discuss all aspects of the purchase: both the positives and negatives.
Source: Freepik
Pros and Cons of Buying a House
Buying a house is undoubtedly a plus, but that’s only apparent at first glance.
Pros of Buying Your Own Home:
- The purchased house will be YOUR PROPERTY. You will no longer need to spend money on rent. No one will evict you.
- You can do repairs and renovations according to your own taste without anyone’s permission.
- No more moving and transporting belongings from place to place. Buy bulky furniture, built-in appliances, and interior items to your liking without fear of damaging them during a move.
- You can have pets in your own home and invite many guests at any time. You won’t need permission from third parties for this.
- You can rent out your personal apartment, making real estate a constant source of income. According to RICS data for the second quarter of 2023, the rental yield for apartments in Cyprus was 10.1%.
- You can leave your property as an inheritance to your children or other relatives.
- Owning your own home will simplify your life after retirement. During this period, incomes may decrease, and not having to pay rent will be a big plus.
Before we conclude the renting vs buying a house question, let’s discuss the downsides of purchasing.
Source: Freepik
Cons of Buying a House:
- Modern homes are quite expensive. Even the cost of an economy-class new building will significantly exceed the cost of secondary housing, especially in large megacities.
- Potential debts to be paid. To purchase housing on credit or mortgage, you will need an initial capital of at least 30%, and the overpayment for the debt closure period can reach 300% of the loan amount.
- The loan process will involve certain documentation and procedural hassle. You will need to confirm your solvency, provide data on previously taken loans, copies of architectural plans of the object, a recommendation from your workplace, and much more. There is also a risk of rejection.
- There is a risk of making a mistake with the purchase. Buying a new building may be unaffordable, and purchasing real estate on the secondary market involves certain risks. During residence, defects such as loud noise, poor pipes, and wiring may emerge, and there may also be disputed ownership rights or unrecognized property ownership documents.
And until you are ready for property ownership for any reason, you will likely have to rent accommodation for some time. And although prices for temporary housing have significantly increased in many European countries, house rental still remains three times more in demand than buying.
So, what is the advantage of renting a place to live?
Main Advantages of Renting a House:
- High mobility. Renting an apartment is your option if your line of work or lifestyle involves frequent relocations.
- Minimal responsibility. Each tenant enters into a contract with the homeowner. The tenant is only obligated to adhere to the points outlined in the contract.
- Financial benefit. There are no credit obligations or debts to relatives, and there is also the opportunity to save money and accumulate funds for a purchase.
- Expense control. If your financial situation changes, you can always rent a cheaper or, conversely, more expensive place.
Source: Freepik
However, despite all the pros of renting mentioned above, several negative aspects should be considered.
Disadvantages of Renting Housing:
- You are not the owner. Renting and paying off a loan are equally burdensome for your budget. However, by paying for accommodation in someone else’s property, you do not become its owner; you only have the right to temporary residence.
- Some freedoms are absent. Living in a rental apartment, you cannot make decisions about how to live in it. For example, the lease agreement may prohibit you from having pets or smoking inside the premises, changing furniture, or performing cosmetic repairs.
- Dependence on the landlord. The homeowner has the right to raise the rent, terminate the contract prematurely, and evict you if they find a reason to do so.
- Additional expenses for moves. Landlords sometimes rent out apartments without furniture and appliances. In this case, you will incur additional financial expenses for their purchase and transportation during moves.
Should I Rent or Buy a House?
To answer this question, try to determine your life plans. If you intend to settle in one city and only leave its limits when necessary, then you can confidently plan to buy. If you expect to change your place of residence – move for education, change jobs for a more promising one elsewhere –it is better to prefer renting.
Renting accommodation is a good option for young families just starting their lives together. For others, buying their own home may be more advisable, thus satisfying family needs. Think thoroughly and choose the option that suits you best!
