Owning A Property Or Renting: What’s More Beneficial In The Long Run?

Buying a house has always been a youngster’s dream no matter which country they live in. However, property prices have proven to be a little too expensive for people, especially in metropolitan cities leading to most of us renting one rather than buying it. But the ever-increasing rents have led to confusion about whether buying is a better option for us, or renting is. In the Indian context, people who can buy a house would rather own a property than rent one.

To choose better, here are some advantages and disadvantages of choosing either option:

Advantages of owning:

· It gives a sense of security and people love to be proud of their home ownership.

· Rent is an expense that is incurred every month without creating any physical asset. Paying EMI, however, has dual benefits; it shelters you while owning the proportional ownership of the house.

· Renting comes with the headache of relocation, which is a waste of time and money as opposed to owning one.

· Real-estate investment is safe as the asset is tangible and usually appreciates over years, giving great returns while selling one.

Advantages of renting

· EMI payments often become a burden on people and rental homes are free of them. There is no house tax or legal issues that one has to deal with while claiming ownership.

· Renting the same property as opposed to paying its monthly EMI leads to a feeling of lower liability. This is because the EMIs are usually thrice or four times the rent you’d pay for the same property.

· Renting apartments closer to work is easy and early on in the career when one doesn’t know where they would finally choose to settle, it is less of a hassle as compared to ownership.

When it comes to owning a property, a capital of Rs 59,40,000 is required in the NCR region and after 20 years, the value of the property would be Rs 2.11 crores considering an 8 per cent annual appreciation in home prices. However, renting a property would help you accumulate about Rs 1.5 crores more if the differential value of the rent and EMI is invested in an SPI with a return rate of 14% per annum.

Therefore, renting becomes more beneficial than owning a house if it is looked at just from a financial standpoint. However, one can supplement the returns of owning a house by renting it out to tenants looking to stay for a year or more. This way, the differential amount can be diminished and the capital lump sum per year increased.

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