In all the home-buying excitement engendered by the low interest rates of the past two years, the benefits of renting – at the right time and in the right place – have largely been overlooked.
The fact is, however, that buying a home is not always the best option for every person, depending on their career plans, life stage and financial circumstances, says Andrew Schaefer, MD of SA’s leading property management company Trafalgar (www.trafalgar.co.za).
“For example, young people who need flexibility to move for work or want to travel the world before settling down shouldn’t necessarily rush into a home purchase or commit to a 20-year home loan. The high initial transactional costs incurred when buying a home means that selling it again in the short-term could easily cause them to lose money.”
Alternatively, he says, you might wish to rent if you are working on contract somewhere for a limited time, or if you want to live in an area that is close to work or close to a particular school, but where you cannot yet afford to buy a home. “Parents often also rent for children who are undertaking tertiary studies in another town or city before transitioning to their own homes.
“And senior citizens with grown-up families are increasingly also choosing to rent, at least for a few years, because it frees them from the security and maintenance responsibilities of home ownership and enables them to travel if they wish and decide where they would like to live permanently in retirement.”
Schaefer also notes that the rental market continues to develop and diversify, giving tenants a greater variety of homes to choose from in different locations – and currently at very competitive rentals. Some other benefits of renting include the following:
*More flexibility. “As a tenant, you can choose to live pretty much anywhere, while homebuyers are restricted to those areas where they can afford to buy. It is true that rents are generally higher in areas where home values are also high, but tenants are more likely to find affordable options than buyers. In addition, tenants always have the option to downsize or move somewhere more affordable at the end of a lease.”
*Free access to amenities such as a swimming pool, tennis court, on-site laundry, children’s playground and entertainment area, which are fairly common features now in apartment or townhouse developments. “More importantly for many tenants, they also get to enjoy the additional security that these complexes offer at no additional cost.”
*No maintenance costs, repair bills or levies. “When you rent a home, the landlord is responsible for all wear and tear, maintenance, repairs and improvements to the property – and well as any levies and the municipal property taxes,” he says.
*Lower monthly bills. “Tenants typically also pay less for utilities than homeowners, especially if their rental home has a pre-paid electricity meter and a separate water meter than enables them to monitor their usage. They also save money on insurance because they only need a short-term policy that covers their own belongings, not the building itself.”
*No transfer duty or other transaction costs. Of course, says Schaefer, tenants will most likely be required to pay a deposit equal to one or two months’ rental, but will not need the sort of deposit often required to be approved for a home loan or cash to pay transactions costs such as transfer duty, legal costs and bond registration fees. In addition, when a lease ends, rental deposits are refundable with interest.
*Efficient budgeting. “In addition, the amount due for rent each month is fixed for the duration of the lease, which enables tenants to budget with more certainty.”
Issued by the Trafalgar Property Group
For more information contact
Andrew Schaefer on 011 214 5200
Or visit www.trafalgar.co.za
About Trafalgar
Trafalgar currently has more than 86 000 residential properties worth more than R80-billion under management in more than 1400 community housing schemes around SA.
