Renting a house is the process of paying a fixed compensation by a tenant (the user of the property) to the landlord/homeowner for use or occupancy of the property. While giving house on rent, a rental agreement should be signed between the ‘potential tenant’ and ‘landlord/homeowner’ stating the terms and conditions for property usage. Renting a house or an apartment is one of the suitable options for those people who have small income or low earnings and also who have no fixed land or residential property. It is also being considered now by those who want to rent in their retirement years and choose the more affordable option. Renting a house gives them reasonable means to access living in the luxurious house or apartment compared to buying it. It also makes sense if they are unsure of the duration for which they would be staying in a particular city. There is no logic in buying land/property in an area or city where you are not going to reside for a longer period of time.
While you decide for renting a house/property, you need to consider its benefits as well as its disadvantages. Let’s have a look at the listed below pros and cons of renting a house or property.
Advantages of Renting a House
Various points in favor of renting a house are listed below:
01. No Need of High Investment
- Process of renting a house involves signing an agreement which is generally for 11 months and the advanced deposits which are also known as ‘down payment’ are usually very less ranging in thousands or one to three months of rent.
- It allows you to have the benefits of living in a premium area where the tenant cannot afford to buy.
- If the house is furnished, you need not invest in the furniture and appliances like refrigerators, washing machine, sofa, beds, etc.
02. No Maintenance Problems
- There are no worries regarding the unknown maintenance and repair works which will keep the tenant free from hassles.
- It is the responsibility of the landlord/homeowner to carry out the repair works such as repairing of cracks that creates problem of leakage, leakage pipes, fixing broken tiles, fixing broken mirrors, maintaining the lighting fixtures and various others.
03. Greater Flexibility and Mobility
- If there are changes in job happening more often in one’s career and there is a need to relocate to other city or location more often, then renting is a better and flexible option under such circumstances.
- Renting makes easy to shift from one location to other as there are no long-term commitments made like payment of EMI, mortgage, etc.
- It is affordable to rent an apartment as it is quite cheaper than buying a land/property.
- It is suitable for those who are starting their career or have low income.
- Local government taxes are also paid by the owner and are included in the rent itself.
05. Easy to Move
- There is no worry for you to wait for someone to lease or buy a house once you want to vacate the house as this is the responsibility of the landlord.
06. Financial Benefits
- Rent along with maintenance charges are only to be paid while you take house on rent and the remaining money can be used for other better and perhaps more profitable investments. For example – investment in fixed deposits, shares, mutual funds, foreign trips, hobbies, higher studies and starting a new business etc.
07. Use of Amenities
- Nowadays, various big residential & housing complexes of high standard have provision of various amenities such as swimming pool, gymnasium, security system etc. They often provide libraries, community hall and play area where kids ranging from the kindergarteners to teenagers can enjoy an active playtime.
- If you happen to get an apartment on rent in these types of complexes, you can have access to the luxurious amenities present in the campus of the complex. Of course, certain additional charges are to be paid for using amenities within the complex in addition to monthly rentals.
Disadvantages of Renting a House
There are various disadvantages/cons related to renting a house which are listed below:
01. Restriction on Design Changes
- As a tenant, you do not have the right to make any changes to the property according to your choice and requirements such as renovating a wall and painting it, etc.
- To live on rent is to live within the basic amenities provided to you by the landlord/homeowner which you may or may not like depending on your specific taste.
- However, if you want to make changes, it should be approved by the homeowner in advance and if any changes are made without permission, you need to return the place as it was prior when you took it on rent.
02. Limitations of the Locality / Neighborhood
- There may be a possibility that you may get or do not get the home/apartment on rent in the area which you and your family may like to live.
03. Risk of Increase in Monthly Rent
- There is a possibility of increase in the monthly rent with increase in the value of asset or the house over a period of time thereby increasing your cost of living.
04. Short – Term Benefits
- Renting an apartment gives expandable money that is beneficial for a shorter period of time.
- While owning a home is a long-term benefit which gives a feeling of security which no money can buy.
05. Less Stability:
- There are various factors such as change in job location, high rise in rental price, unwanted neighbors on the other side of the wall which may lead to vacating the home or apartment by the tenant.
06. No Guarantee of Renewal
- There is no guarantee of the rental agreement to be renewed after the renting period. It depends upon the landlord/homeowner whether to allow further for residing or not.
- If agreed, then it may also lead to the unthoughtful rise in the monthly rentals.
- In other words, the landlord/homeowner only agree to renew the rental agreement after changing high rent price.
07. Money and Equity Does Not Grow
- The property which you are taking on rent does not give any return on it to you.
- It is the owner of the house who benefits from this as he builds up some amount of capital and equity from it.
Above listed were the points regarding the advantages/pros as well as disadvantages/cons of renting a house. Hope it would have provided you with the knowledge to take informed decision about whether to go for renting a house or not. It mostly depends upon the financial situation of the person and various other factors.
You might have had your share of interesting experiences as a tenant, do let us know about these by commenting in the ‘comments section’ provided below. Keep reading the next articles in the series to be better equipped with property news, views and happening on Gharpedia.
Image Courtesy: Image 3, Image 4, Image 6, Image 8