For many decades, there has been a conventional knowledge that purchasing a property makes better sense than renting. You will have to spend a significant amount of money whether you opt to rent or purchase a home.
So, does it make more sense to invest that money in a house you will eventually own or is paying regular rent is better?
The conventional knowledge may right in some instances. However, some factors can make renting a much better option.
Here are the reasons The Letting Game supplied me with, so that you may consider renting a property instead of purchasing it.
You don’t intend to stay in the property for a long time
If you plan to move soon, it doesn’t make sense to purchase the home. For example, if you intend to stay put for a year or two, then purchasing the home will be a very poor investment decision.
In such a short duration, the property will not gain enough value to cover the cost of either buying it or selling it. Besides, you shouldn’t forget that purchasing or selling a home is a hassle compared to shifting from one rental property to another.
The tax issue is another reason you should consider renting rather than buying a house. In most regions, house sale tax exclusion makes up for about £250,000 of the profit of the sale of your home exempt from tax.
However, one of the requirements of this exclusion is that you should have lived in that home for two years out of the last half a decade. If you plan to move within two years of purchasing, you will not meet this requirement.
That means if you are lucky to sell your property for again, you will get stuck paying taxes on that profit – that could potentially cost you thousands of dollars.
If you are not confident about your job security, you should not think of making a significant purchase like a new home. In case you lost your primary source of income recently, you should focus on cutting your housing costs. This will be painless and quick process if you opt to rent a house.
If you already own a home, then, income crisis could force you to sell the property at a bad time. Perhaps it will take months to find a serious buyer, or you may be forced to sell the house for less than the amount of money you paid for it.
You don’t need to pay a big down payment
Another field where renters enjoy a better financial deal is upon signing in the case of renting a house. When buying a home with a mortgage, you will be required to make a sizeable down payment, which in most cases is 20% or more.
But you don’t need to save such as huge down payment to move into a rental home. Though the exact amount you require to move varies depending on location and the home, you will be required to pay way less amount than you would need to when buying a house.
No maintenance costs
One of the biggest advantages renters enjoy is that they don’t need to spend money on repairs and maintenance of the home. Once you rent a property, the landlord is always responsible for all necessary repairs and regular maintenance.
If, for instance, your roof starts to leak or there are plumbing problems, you don’t have any financial responsibility to fix the issues. On the other hand, homeowners are responsible for all necessary repairs, renovations, and maintenance costs.
Though owning a home might be advantageous, in some instances, renting is better.