One of the greatest and arguably most expensive decisions we make as human beings is where we choose to live as it is an integral determinant of our lifestyles.

On paper and at first glance, the idea of owning a house coupled with the emotional appeal makes it a no brainer but there are arguments for renting that could sway your decision of taking that plunge to homeownership.

There is no formula to making this decision as you have your personal reasons for choosing one option and you are faced by specific circumstances.

Here are a few pointers that will help you in the decision-making process.


Whether renting or buying, something you have to consider is your monthly salary and how your housing costs fit in the overall budget. Housing is typically your largest monthly expense and the recommended percentage being 30 per cent of your gross monthly income. Working with a fixed figure will save you from living outside your means.

Buying a house will require a down payment of no less than six per cent of the home’s value. Here, you might want to consider some financing options with the most preferred being taking a mortgage. You also have to plan how you shall pay for the instalments of the loan.

When renting, the upfront costs are relatively lower. You have to budget in the security deposit and pay it together with the first month’s rent. Also, buying a house in a desirable area might be unaffordable, but renting there might be within your price range.


For homeowners, you have to consider maintenance costs and taxes such as rates to the county governments on an annual basis.

On average, it is estimated that homeowners spend between one per cent and four per cent each year on upkeep and this expense can be higher as the home ages.

For a renter, maintenance costs are the last thing on their mind as they are not responsible for repair costs. If there is an issue with the plumbing or lighting, you direct the this to the landlord. But when moving out, the renter will have to cater for any damage in the unit as the landlord falls back on the security deposit to conduct any repairs.


To determine which decision would make more of an economic sense, financial planners recommend comparing the annual expenses.

When buying a house, the expenses include the interest rate on the mortgage, maintenance costs, utility bills, taxes/ rates and insurance whereas when renting you have the rent and the security deposit.

With the information, you can conduct a price-rent ratio analysis where you compare the annual expenses of the home with the annual rent of a unit. Buying a home is recommended if the ratio falls below 20 per cent.


In analyzing trends for real estate uptake, proximity to the place of work factors greatly. If you have you a job that involves lots of travelling, you may opt for the flexibility offered by renting a unit rather than buying a house which you may be forced to sell quickly when you are relocated.

Renting makes relocating for work less time-consuming, and cheaper whereas when moving with a may make you have to sell the house at lower and potentially take a loss on your investment. Consider renting if you plan to live in an area in less than five years.

On the other hand, your plan could be to raise a family with a stable job that can facilitate you to live long term in an area and in such an instance buying a home will give you that much-needed stability to lead a family life. You will tend to get more invested in the community by taking part in the neighbourhood association and engaging in bonding activities with the neighbours.


Wealth managers advise potential homeowners not to consider the buying option as an investment as it is more of an expense. Although homeownership builds equity over time, this doesn’t equate to automatic profit.

There are many factors involved in the growth of the value of the house, for example, price, renovations and additions, and rent growth rates in the area.

You can turn your home into a source of income where you rent out the extra room or even add additional units in the compound – an SQ perhaps. Short term renters can be your target market thanks to sharing apps like Airbnb.

For a renter, sub-letting is also an option following an agreement with a landlord. This has seen many people venturing into renting out their spaces for a little extra income.


In other words, are you planning on putting down roots in your community or are you craving more flexibility?

If you feel certain you’ll stay in a home for at least five years, buying a home could make sense. That’s because it could be a good fit both financially and emotionally – you can put personal touches on your home and really make it feel like it’s yours.

But renting is the better option if you prefer to be more nomadic. Let’s say you’re really hoping to get that job promotion but it’s halfway across the country. You don’t want to have to deal with the hassle of selling a home while transitioning to a new position. Or perhaps you’ve moved to a new area and want some time to get to know different neighbourhoods before settling down somewhere.

Sure, you can buy a home and then sell it within a few years, but the costs are hardly worth it. Aside from initial closing and moving costs, you may be paying more closing costs when selling a home in addition to other costs such as repairs and renovations that would make the house sell for top dollar.

You should not rush into making this decision. The factors above may give you guidance on how you go about it but in the end, it is up to you to evaluate all the subjective and non-financial considerations. There isn’t always a clear answer to the question of whether to rent or buy. Depending on your life situation and finances, the answer might change over time.

There are other options such as rent to own where you start out renting then move on to becoming a homeowner. No matter what decision you make, it is crucial you make an informed decision based on your financial situation and lifestyle.

You can buy a home and then sell it within a few years, but the costs are hardly worth it.