The decision of buying or renting a house
Such a dilemma comes up in cities and big towns where people have come to look for opportunities and better living conditions. There is most pressure especially for the low-income citizens who struggle to make ends meet. Such people have to depend on social and public housing. The middle-income citizens depend on the rates at the market for them to access affordable housing (Menon et al., 2019)
Renting involves the process of making an agreement with a house owner or a company and signing a lease that binds you to the contract of your agreement (Kiplinger, 2013). The decision of how much to pay for a rented house depends on the tenant and the flexibility of the income. Renting offers a lot of flexibility and freedom and does not tie you to one place. This is especially possible if it is a monthly lease as opposed to a 6-month lease or 1-year lease.
The responsibility of maintaining the house and doing repairs around the house is done by the owner of the property, thus relieving the tenant of unforeseen repair and maintenance. Renting is a cheaper option for people working in a dynamic environment where job transfers are frequent. This will enable a person to change places easily with minimum cost. The responsibility of owning a house will be avoided.
Renting a house, however, has its shortcomings such as fluctuating renting prices which can be changed by the property owner at any time. This can cause unforeseen financial problems to a tenant. There is a limitation to what can be done to house such as remodelling or even having a pet since some houses have a no pet policy. The tenant does not benefit from tax benefits that homeowners are entitled to. Furthermore, there is no guarantee of living in the house as the owner can evict the tenant at his own will.
The cost of buying a house is tied to or is directly proportional to the cost of land, location building materials, infrastructure, labour and the profit margin set by the seller. These factors raise the cost of the house, making it difficult for the majority of the population to purchase a house. To buy a house, the buyer needs to go through a pre-approval process that usually takes one and a half months. To make the process less hectic for the buyer, real estate professionals are used to oversee the transaction and finally make the purchase after the buyer signs all the required documentation.
Buying a house offers complete freedom to the new owner as any changes or remodelling can be done on the house. It also gives the owner a sense of stability and comfort as there is no fear of eviction or increased rental charges (Majaski, 2020). Furthermore, house owners enjoy tax benefits, thus lowering the mortgage interest payment.
Buying and owning a house comes along with its drawbacks, especially when the owner needs to change where they live. These changes are expensive to a house owner as more cost has to be incurred move to another place. The cost of house ownership is relatively higher compared to the cost of renting a house. To own a house, certain expenses come along such as property taxes, repairs and maintenance, house insurance, trash pickup service and other more expenses that are not incurred by a person renting a house.
Although the decision of either buying or renting a house heavily depends on the person’s financial status, buying a house offers more comfort and reliability, thus making a better choice. Despite adding more responsibilities to the owner, owning a house has a significant effect in developing a family as it gives a good environment where children can grow and make memories. It also promotes social growth as people in such neighbourhoods do not change places as rapidly as those in rental houses. Renting or buying a house applies directly to my life as this two are the only form of living models available. The decision of buying or renting a house is inevitable in everybody’s life. Buying a house might be initially expensive but is a significant factor in the lives of many people, including me.
Reference
Majaski, C. (2020). The difference between renting and owning a home. Investopedia. https://www.investopedia.com/articles/personal-finance/083115/renting-vs-owning-home-pros-and-cons.asp
Kiplinger Team. (2013, January 24). 6 steps for renting your first home. Kiplinger. https://www.kiplinger.com/article/real-estate/t050-c006-s001-steps-for-renting-a-home.html
Tabner, I. T. (2016). Buying versus renting–Determinants of the net present value of home ownership for individual households. International Review of Financial Analysis, 48, 233-246.
Menon, A., Hodkinson, G., Galal, H., Reckford, J., & Charles, A. (2019). Making affordable housing a reality in cities. In Insight Report. Geneva: World Economic Forum http://www3. weforum. org/docs/WEF_Making_Affordable_Housing_A_Reality_In _ Cities_report. pdf accessed on (Vol. 26, No. 01, p. 2020).