Owning a home is always most people’s lifelong dream. For one, it has many financial benefits, such as not having to pay monthly rent to line the pockets of someone else, or deal with a landlord. However, some potential homeowners prefer renting and see it as a more viable financial plan.
While both buying and renting have their financial advantages, not everyone is equipped or ready to own a home.
This article explores some of the reasons that renting can make good financial sense for you.
1. No maintenance or repair costs
Renting a home basically relieves you from all maintenance and repair obligations. Your landlord should be responsible for all maintenance, repairs, and improvements of the property. Therefore, should an appliance stop working or roof start leaking, then the landlord should be the one to get it fixed.
In contrast, homeowners are responsible for all maintenance, repairs, and renovation costs that are done on their properties. Depending on the nature of repairs being done, this can get quite costly.
2. No real estate taxes
This is perhaps one of the most significant benefits of renting a home. Renters never have to pay property taxes, which can be a hefty burden. Homeowners may need to fork out thousands annually in real estate taxes alone.
These taxes can be an even more significant burden for newly built, larger homes.
3. More flexibility on where to live
Renters have the freedom to live virtually anywhere they want as opposed to homeowners who are restricted to specific areas that they can afford. For instance, a home in the city can be doable for a renter while most home buyers might find it expensive.
Although renting can be expensive in areas with high home value, renters can always find a more affordable home to relocate to as opposed to a homeowner.
4. Flexibility to downsize
With the current economy, many people struggle just to make ends meet. Renting allows citizens the option to downgrade to more affordable living spaces at the end of their leases. The opportunity to downsize is especially vital for retirees looking for less costly, smaller living alternatives that match their budget.
As a homeowner, however, it’s a lot more challenging to try and break free of an expensive home due to the fees involved. In addition, relocating gets to be even more costly if the homeowner invested a lot of money in repairs and renovations. In most instances, even the selling price may not cover the total costs, making moving almost impossible.
5. Lower insurance costs
A homeowner must always maintain his/her home’s insurance policy. For renters, this is equivalent to a renter’s insurance policy. Only that renter’s insurance is much cheaper as it typically only needs to cover the renters contents and not the building/structure. It also covers almost everything owned by the renter, from furniture to computers and other valuables.
6. Access to amenities
Renters sometimes have access to amenities like in-ground pools, fitness centres, etc. that would otherwise be huge expenses and unattainable or unrealistic for the vast majority of us. Most of these amenities come standard to many mid-scale to upscale apartments at no additional charge to tenants.
In contrast, if a homeowner wants any one of these amenities, he/she must fork a lot of money for installation and maintenance.
7. No down payment
The upfront cost for renting a home is much friendlier than that of buying one. As a renter, you may only need to pay a security deposit that often equals one month’s rent, and you’re good to go.
When purchasing a home with a mortgage, however, you will be required to put down a sizable down payment, usually around 10% of the value of the house – tens of thousands of pounds!
For homeowners that don’t have the savings to meet the down payment requirements, renting might be a more suitable option.
8. Decreasing property value
The constant change in property value affects both renters and homeowners. But it affects homeowners more substantially. Renters hardly ever feel the pinch, if at all. Property value impacts the amount of property taxes that homeowners end up paying, the amount of mortgage, and more.
Renters are not always as adversely affected by rocky housing markets as homeowners and buyers.
9. Fixed rent amount
Renters pay fixed rent amounts for the span of their lease agreements. While landlords can raise rent with notice, a renter can budget more efficiently since you always know the amount of rent to pay.
On the other hand, mortgages with adjustable rates can fluctuate and lead to a significant increase in property taxes.
10. Lower utility costs
Most homes are typically larger than rented apartments. As a result, homes are more costly to heat. Even electricity and water bills are usually higher in homes compared to rentals.
Rental apartments typically have a more compact, efficient floor plan. This makes them more affordable and easier to heat and power compared to owned homes.
Owning a home comes with many benefits in the long run. However, renting might be a better alternative for those looking to avoid the hassles that come with homeownership. Of course, your preference depends on your lifestyle, financial situation, working environment, and other factors. Rent a home today and avoid the hassles of buying one.