It is recommended that a tenant spends no more than 30% of household income on rent
India’s residential rental market has seen steady growth over the years. However, it is always a tough choice to make between renting and buying as each comes with its own set of pros and cons. Let us look at some of the advantages of renting a house-
1. It is no lie that buying a house is still a herculean task for many, considering the ever-increasing property prices in most metropolitan cities. Whereas, renting a place is comparatively cheaper because annual rental rates are between one and three per cent of the value of the property. Not only does renting provide a wider choice of locations, but it also gives the flexibility to relocate, if needed. People with transferable jobs are more likely to stay on rent for a while, before purchasing a property.
2. Rental properties can prove to be good for financial health if one has envisaged expenses, like funding for child education, which can deplete funds, if not planned beforehand. Similarly, for someone who is unsure about the security of their job or place or even wants to set up a new company in the future, rentals can be beneficial. Ideally, a tenant is suggested to not spend more than 25 per cent to 30 per cent of the household income on rent.
3. Owning a property comes with recurring maintenance charges, such as property tax and society maintenance cost among others, that can be a financial burden. On the other hand, a tenant does not necessarily need to bat an eyelid about this. In most cases, an individual buys a residential property by paying equated monthly installments (EMIs). But if one decides to rent instead, they can use the same money to buy assets that can give higher returns. Thus, no matter what your decision is, make sure to look through every detail before you finalise.
The author is CEO, Reliance Home Finance
DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.