How Renting a House Can be More Financially Beneficial?

Many people have a goal in life to have their own home. Living in a rented house has its advantages and disadvantages. Everyone cannot afford to have their own house because of the expensive property prices. Especially in the UAE, property prices are high and it’s not affordable for everyone to have a dream home. For all those who cannot afford to have their own home they have the option to live in a rented home. 

Some people might have plans to buy a home by taking a home loan, pulling up their savings, borrowing money and ultimately buying their dream home. For these people they put all their life savings, borrow money and their future income will also get diverted to repay the loans taken for home. A big portion of their income will be allocated in repaying the loans. It may be financially difficult to manage the income earned after buying a home specifically if there is one person earning in the family. 

Living in a rented house makes good sense for some people as they can manage their financial circumstances. Here in this article, we bring you the financial advantages of renting instead of buying a home. 

  1. No Home renovation expenses
  2. Facility to use amenities
  3. No taxes
  4. Upfront cost
  5. More flexibility
  6. Decrease in property value
  7. Fixed rent
  8. Less insurance
  9. Utility payments
  10. Reduce expense

1. No Home Renovation expenses

The main advantage of living in a rented house is you need not worry about renovation, house painting or repairs. The owner will have the maintenance of house, repairs of house and have other expenses incurred on the property. The owner or the landlord is responsible for the property who is responsible for fixing the issues related to the house. Depending on the nature of the repairs the maintenance expenses can range for the home. 

2. Expenses on amenities 

When you are living in a rented property such as the apartments or community houses you can access amenities such as gym, swimming pool, spa, playground for children and other facilities. Some apartments do not charge anything additional but some apartments may charge maintenance fees. But, if you are having your own house then you cannot access all of these facilities as it will become very expensive. Here in apartments, the costs are shared between the tenants and it becomes easily affordable for tenants to enjoy the facilities.

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3. No taxes

One of the great advantages of living in rental homes is that you never have to worry about payment of taxes. The home owner will have to pay the property taxes and the tenant need not worry about it. Real estate taxes are heavily charged for the owners and some areas cost more and some areas may charge less. The taxes are estimated based on the location, size of the property, value of the property and other factors. With the increasing prices, the property taxes can significantly become a burden to the house owners. 

4. Upfront cost

If you are planning to live in a rental property then the owner will ask for upfront payment in the form of advance deposit. This amount will be equal to the one month or two months rent. The remains safe and will be returned to the tenant provided there are no damages to the rented property. 

In order to ensure more security to the amount, the rental deed should clearly mention the terms and conditions. The tenant should make sure that upfront payment terms are clearly understood and agreed upon. 

5. More Flexibility

The greater advantage that renters have is they can live anywhere they want whereas the homeowners cannot have the flexibility to move to anyplace they either have to buy property or live on rent. Living in an expensive city like Dubai where the cost of living is high and it is not affordable for many people to buy property. 

If you are a renter then you can live even in the expensive city on rent. The tenants can afford to make the monthly payment and live on rent than the home owners. Homeowners cannot leave their home and settle easily in other places whereas renters have the flexibility to move any location. 

6. Decrease in property value

The property owners are always concerned about the decrease in the property value. The renters do not have the concern about the decrease in property value. The value of property determines the rental income. If the property value or the location does not have good demand then the owner is concerned because it will directly affect the rental income. For renters, the decrease in property value means less rent and moreover renters do not bother about the increase or decrease in property value.

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7. Fixed rent

The renter can know the amount of rent payable each month. Rental amount remains fixed for a period of time and according to the agreement. You can plan your expenses for a period of time as you are aware of the fixed expenses. You can prioritise your salary income and segregate according to your needs as the fixed rental expense is predetermined. However, the landlord can revise the rent with due notice and you can make changes in your budget. 

8. Less Insurance

Home owners should maintain insurance for the property. The renters do not have to have such high expenses, they have renters insurance policy which is lesser compared to property insurance. The renters insurance covers only the assets owned by the tenant. 

For example, an average policy for a rented 2-bedroom apartment will cost AED ~1,000/year for AED 200,000 of coverage.

9. Utility payments

The size of an owner’s home will be bigger than the size of a rental property. As a result the cost of expenses on utility  will be more for an owner’s house and little less for a rented house. In your own house you have the luxury of using any amenities and you spend more on utility expenses. On the other hand in a rented house you spend less and other related expenses also become lesser. 

10. Reduce expenses

The renters can have the option of reducing their rental expense by moving to lesser rental homes. The renters can have the option of sharing the accommodation and reduce their monthly expenses. Whereas the homeowner, if purchased home on loan, has to pay the home loan and also does not have the flexibility of shifting to other places. 

Take away

If you are buying a home with borrowed money, bank loans, savings then think again. You will have to lose all your savings, increase loan repayments burden and all your future EMI payments will be aligned from your earnings. 

On the other hand if you are planning to live in rented accommodation then you have to set aside a fixed amount of money towards rent. A fixed rental expense is mandatory payment to survive. Once you separate rental expenses then all other expenses will follow. 

Whether to rent or buy a home is an individual decision and it depends on the person’s lifestyle, ancestor assets,  financial situation, earning members in the family and various other factors.

Meet the author
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Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It’s a commercial mortgage banking company. He has a “Doctoral Degree in Commerce” and two master’s degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.







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