Is rent really a dent?

An urban myth is that owning property is less expensive than renting. Let’s explore if living in your own house is actually cheaper

NT Features

The first grouse any renter feels is that they are throwing away money every month. That’s not really true. Yes, you may not be making a monthly payment towards what that would one day be your property. But living always costs money even when you’re staying in your own house. Owning a house also has expenses that don’t go towards building equity.

When you rent, you have an idea of your monthly housing budget. As an owner, you may just pay your equated monthly instalment (EMI) and regular bills in one month. But you never know the next month you might need to spend an exorbitant amount on plumbing. While you might be temporarily inconvenienced as a renter, the wear and tear of the property is taken care of by the owner who is renting out the property.

While homeownership is often seen as a way to build wealth, it may not always be true. The attractive neighbourhood you moved in could lose its prominence because of some unfortunate events – approach roads, drainage issues. And your property price could fall.

Also, there could be a residential construction rise which could also keep prices down. Since there will be more apartments than buyers, the apartment value may not increase. And your property valuation could remain the same after maybe ten years. Taking inflation into account and the interest you’ve paid, you’ve lost money.

Keep in mind that home ownership is a commitment. If you work long hours or travel frequently, you may not get the time to get around doing tasks that each house demands -- like getting leakages fixed, repainting the living room or fixing the kitchen cabinet. Whereas, if you rent, your landlord will take care of all the repairs and maintenance. Of course they may not get to doing it as quickly as you would like. While renting however, you may have to move suddenly if your landlord decides to sell the property or simply just hike up the rent to more than you can afford. Also, each time your lease is up for renewal, as a renter, you face unpredictable rent increases. If you live in a central area, rent increases can be steep. Whereas house payments will never increase. But property taxes could vary.

In today’s time, when relocating is very common, owning a home is not always an asset. If you have been transferred, a homeowner must first wait to sell their home before relocating to another. Or find a renter. Selling may take up to a year or more. And being an absent landlord has other risks and responsibilities. Most renters, even those committed to an annual lease, can get out of the lease by giving the landlord one-month advance notice.