Advantages and Disadvantages of Renting

Renting Meaning

An individual who does not have his or her own home is always confused whether to purchase own house or live on rent and that is where the concept of renting comes into play because the only place where you do not have to pay any rent is when you live in the hearts of people otherwise you have to pay rent for staying at all places. Renting is the term which is used in the context of property. Renting is that monthly payment which the tenant has to pay to the owner of the property for living in the flat or house of the owner. In order to have to understand about this term, one should look at the advantages and disadvantages of renting –

Advantages of Renting

No Capital requirement

The biggest advantage of renting is that individual does not need to invest large sums of capital because when you go to purchase a house it can cost anywhere between $300000 to $1000000 depending on the size and location whereas as far as rent is concerned you can get the house on rent in the same location or size by paying nominal rent and hence people who do not have enough income to purchase a house can take the same house on rent.


Another benefit of renting is that one gets plenty of flexibility if one is living in a rented house, hence if you have a transferable job than you cannot purchase house everywhere you go or if you do not like the locality in which you are residing you can change the house by giving 1 or 2 month notice to the landlord. In simple words, just like in stock market you do not hold 1 stock forever and keep changing the stocks in your portfolio in the same way you get to live in different houses if you are living on rent.

Repairs and Maintenance of the Property

If you are living in a house as a tenant you do not have to worry about repairs expenses which happen from time to time and also yearly maintenance charges and taxes of the government on the property. Hence as a tenant, you have to pay rent only and all other problems and expenses related to property is the responsibility of the owner of the property.

Disadvantages of Renting

No Scope of Capital Appreciation

The biggest disadvantage of renting is that one is paying monthly rent which will yield nothing in future and instead of paying that rent if one has taken the bank loan and paid interest than he or she will not only have property in his or her name but also chances of capital appreciation are there. In simple words, you get the dual advantage if you purchase a house one is that of saving of rent and other is a good return on investment due to capital appreciation of the purchased property.

No Tax Benefits

Another limitation of renting is that one does not get the tax advantage as interest on housing loan is a tax-deductible expense and by not taking a loan one is paying more income tax than he or she was supposed to pay. Hence in simple words tax benefit along with capital appreciation can lead to more benefit for an individual who has purchased a house rather than renting a house.

Landlord can ask to leave the house anytime

Another limitation of renting is that one is never sure for how long one will live in that house as the owner can ask the tenant anytime to leave the house and hence this uncertainty will always be there if you are living in a rented house. Besides one can never make any modification to the house or do anything according to his or her choice of the house which can be frustrating at times.

As one can see from the above pros and cons of renting that one should be careful and not make the decision of renting in haste rather one should look at both the sides of renting and then decide whether to go for it or purchase a house as the financial implication of choosing any option is huge.

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