Renting vs Buying

Renting is the process of making a contract between the owner of the property and the tenant to stay in the place of the owner for the possession on agreed terms & conditions and sum to be paid by the tenant at regular intervals as rent to the owner.

Buying, on the other hand, is the process of acquiring the property permanently in exchange for money.

Reasons for Renting:

  • When the buyer is unable to purchase due to lack of funds i.e. called as "rent by necessity".

  • When the need of the buyer is temporarily then he/she goes for renting.

  • Renting does not involve any trouble regarding lifespan and maintenance.

  • Renting can generate profit for the owner.

  • Renting also becomes an alternative option of revenue for the owner.

Reasons for Buying:

  • When a person can afford to buy then he/she creates a pride of ownership and a sense of stability.

  • Buying an apartment/flat gives the benefit of the amenities lifts, car parking, water supply, electricity supply, power back-up, security, etc rather than an individual house.

  • Buying an apartment helps to build a valuable asset i.e. worth more than a place to live.

  • Buying sometimes becomes mandatory for the buyer due to any emergency.

  • Buying can deduct the interest i.e. paid on the mortgage from the taxable income.

Benefits of Renting:

1. Fewer costs: Renting does not involve any maintenance, repairs, and renovation costs.

2.No, down payment: Renting does not deal with a down payment it includes a security deposit which is less than the monthly rent to be paid by the tenant.

3.No, responsibility for maintenance: There is very little or no responsibility for the maintenance by the tenant. The owner is responsible for all the repairs and maintenance.

4. No, long-term commitment: The contract of lease is usually not more than 24 months and sometimes just 12 months.

5.Less Insurance: The insurance of the owner is more expensive than the insurance of the tenant.

Benefits of Buying:

1.Having a permanent roof over your head: Buying an apartment permanently will give you a sense of peace and security as you do not have to live according to the rules and regulations of the owner.

2.No uncertainty and compromise: You can meet all of your expectations by buying a home and also there will be no fear and anxiety for termination of the lease agreement by the owner.

3.Tax Advantage: The owners can deduct mortgage interest on their federal income taxes and can also deduct some closing fees and property taxes.

4.Making your asset: Renting involves payment of rent every month which is considered an expenditure for the tenant but buying involves payment of EMI(Equated Monthly Installment) through which the equity of the home goes up.

5.Design your own home: Buying your own home gives you enormous freedom to design it in your way like changes to the floor, carpeting, paint, etc without seeking permission from the landlord.