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Buying or renting property is one of the most controversial topics. Some people believe that renting is a waste of money and does not contribute to any form of equity build-up or investment.
While it may all depend on your lifestyle and your needs, the increasing interest rates are hindering the purchasing power of millennials and the change in work-life conditions is impacting a good deal the way people perceive this subject.
According to a study conducted by Apartment List, the narrative for which millennials – aged between 26 to 41, in the United States, are choosing to rent post the pandemic changed. Participants in the 2018 survey chose to rent for the flexibility that renting provides. Meanwhile, most participants in the same survey, in 2022, said that they cannot afford to buy a home.
Whether it is for the lifestyle you chose or you can’t afford to buy a home, why is it that you should consider renting, especially if you are an early-career professional?
Landlords take care of maintenance charges
Landlords are responsible for making sure that the rental unit is compliant with the health, safety, and housing or maintenance standards, according to the Residential Tenancies Act, around Canada. Your landlord oversees and assumes full responsibility for maintenance costs and improvement and repairs bills.
Renting is not a financial burden
Instead of watching your money go down the drain with increasing mortgage interests and having to get indebted or spend years saving for a property’s down payment. Renting requires only a small deposit called a security deposit at the beginning of the contractual relationship which is usually equal to one month’s value of rent. Home insurance is always much more expensive than rentals. Plus, monthly rent is less costly than a monthly mortgage repayment.
High transaction costs of buying and selling a property:
Buying a house makes you responsible for paying taxes, and taxes vary proportionally with property values, for instance, if a property appreciates in value – which is usually the case, taxes increase.
Renting provides more flexibility:
A Forbes’ article says that renters have more flexibility in recessions. This means that renters have more flexibility in where to live. Renters may leave their unit for a cheaper one to avoid the burden of paying increasing monthly rents. Meanwhile, the federal reserves, to fight recessions, increase interest rates which leave homeowners with higher mortgage interests and less flexibility to change homes.
In addition, a lease is always more flexible. Tenancy terms can be negotiated, shortened or extended, inclusive or less inclusive, and vary to suit the needs of both parties.
High earners choose to rent for flexibility:
Choosing where to live is closely tied to the life you chose to have. Renting may be less costly if you are looking for more amenities and conveniences: pools, fitness centres, parks, proximity to jobs, clubhouses, etc.
Renting helps you build your credit history:
If you are a fresh grad or an early-career professional, home ownership can be too costly. Especially if you did not have enough time to build a solid credit history. For this reason, most millennials and Gen-Zers are choosing to rent in the early stages of their career.
Dwello can help to build your credit history by notifying the credit agencies when rent is paid on time. Sign-up for FREE here and check out the rewards you get when you pay rent with Dwello.