Let’s look at some of the advantages and disadvantages of both buying and renting residential property, to help you decide what your best option would be.
Renting a home
| Advantages | Disadvantages |
| You don’t have to pay municipality taxes or homeowners comprehensive insurance (insurance for the building). | Your rent can and will increase |
| Flexibility to move when relocation opportunities arise – depending on your lease agreement. | The money you spend on rent does not go towards an asset for you to start growing your wealth. |
| You can sometimes rent a property which you would not be able to afford to buy. | Your lease might not get renewed and you will be forced to leave. |
| Predictability of a fixed monthly rental for a certain period | You may not be able to make changes to the property to make it your own or you will need the owner’s consent to make any changes |
| Smaller amount of deposit upfront compared to upfront costs when buying. | You may have to rely on your landlord to do maintenance or make repairs. |
| Less responsibility associated with renting. | |
| Limited maintenance costs for the property |
Buying a home
| Advantages | Disadvantages |
| In the long-term, property can be an investment. | You will have to pay municipality taxes, maintenance costs, insurance, bond registration and transfer costs. |
| You can alter your home to suit your needs. | It can be harder to relocate quickly – but not impossible as you can rent out your property. |
| You could rent out your property | Selling your property might not be as profitable as you expected depending on market fluctuations between when you buy and when you decide to sell. |
| You could access additional equity in your property should you need it. | |
| You can improve your credit score with timely payments of your Home Loan repayments. |
Why we think buying can be better than renting
So, owning a property costs more but it could give you the opportunity to create wealth for yourself and the ability to access funds in the future when you might need it most. Renting is convenient but in the long term it is expensive because you will never be able to get any of your rental payments back again.
A home is an investment
Buying a home could be a good long-term investment. If you can afford your home and are happy to live in it then your home is also an investment in your happiness. However, if you are buying a property to sell at a later stage then you need to plan and get as much advice as possible before you make your decision. And, most importantly you need to be comfortable with the costs of buying a home.
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Read more related to this topic
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Learn more about the First Home Finance housing subsidy
Some permanent South African residents may qualify for a housing subsidy from the government.
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