According to findings by the 2016 Census, 30.9 per cent of Australians are renting. In Sydney more than half of households are renting and the Melbourne percentage of renters isn’t too far behind. Across Australia, the same Census results found that just 31 per cent of Australians own their home outright, and 34.5 per cent own a home but are currently paying off a mortgage. Regardless of which option you choose, you certainly aren’t alone.
Read on for a no-nonsense pros and cons list of renting versus buying.
Renting
Pros
- You have the flexibility to move as often as you want, to where ever you want. If you dislike the new developments in your area, or an up-and-coming suburb offers the lifestyle you want, you can move as soon as your current lease is up.
- Maintenance and repairs are included. If paint peels, the oven stops working or there’s a leak in the roof, it’s up to your landlord to get it sorted quick smart – at no cost to you.
- You can live in areas you couldn’t afford to buy in. In some areas, it’s cheaper to rent a property than it would be to buy and make mortgage repayments. The benefits of a better location may mean access to better schools for your children and public transport.
- As renting can be significantly cheaper than making mortgage repayments, renters may find themselves with a surplus of cash that allows them to either indulge in life’s little luxuries, save or invest.
Cons
- The money you spend on rent essentially disappears into the pocket of your landlord, never to be seen again. You aren’t building any equity or working towards paying off an asset.
- Your rent can increase year on year, regardless of whether you move or if the property is maintained.
- Getting repairs and maintenance taken care of in a timely manner can be a challenge if you have a lacklustre landlord or property agent.
- Your ability to decorate and make the home your own is limited. You will need permission to paint anything, hang shelves or pictures on the walls or have pets.
The third option
Rent-vesting
If you can’t afford to buy in the area you want to live, but you want to invest in a property, rent-vesting is a good idea. Buy in a neighbourhood that is affordable and likely to be a good investment, and rent in a more convenient or desirable location. It’s more affordable to rent in an inner-urban area than to purchase there, so by buying an investment property that you can afford, and continuing to rent close to work, near the beach or in the city, you won’t be compromising your lifestyle. This option is good for people whose lifestyle or work situation isn’t permanent, if you aren’t sure where you want to settle or you don’t see the burden of a large non-tax deductible mortgage on your home as the best use of your money.
This article originally appeared on Better Homes and Gardens.
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