Over 400 people were surveyed by Private Property and the results revealed that most South Africans believe it is better to own a home than to rent one. What would your choice be?
Let’s compare the two:
Buying and renting have pros and cons
Cons on the rental side are that you have no control over the living environment, the landlord can increase the rent and you must pay. Landlords might not renew your lease, then you will need to pay moving costs again.
One disadvantage of buying is that you may need to make home improvements and for that, you’ll need money readily available. For instance, if the tap breaks, you’ll need to fix it right away. You will need a deposit of at least 20% to get a better interest rate when applying for a bond and you need to have cash to pay the transfer costs. When you own a home, you are at the mercy of the bank when the interest rate goes up, you have a higher monthly installment. For example, if you find your dream job in another province and sell your home, you may not get the desired return since you did not stay in the property long enough.
There are risks associated with renting. Nothing is definite. Moving home because you have found something bigger and better is one thing. Moving house because your lease has come to an end is another. In addition to paying off a bond, homeowners can boost the value of their homes by making improvements. It may encourage tenants to make changes to their living conditions, but under South African law, tenants who improve their rented homes must leave anything that is regarded as a fixture behind when they move.
To decide which route to go, ask yourself: –
• Do you feel you need to save more for a deposit?
• Could changing conditions affect your job security?
• Do you want to avoid home maintenance?
• Will a mortgage prevent you from saving for other things?
• Do you need to build or rebuild your credit?
• Are you planning to move soon?
If you answered yes to any of these questions, renting might be the right choice for you.
Buying isn’t always the right fit for everyone. The decision to buy is a personal one, and you will know when it is the right time for you. Make sure you do your research and calculate your costs before deciding.