The buy or rent debate was highlighted recently in an online research survey conducted by Columinate on behalf of Private Property. Of the 400 people polled, 202 respondents were asked questions about John, a fictitious 35-year-old male who owned the property that he and his family lived in. The remaining 198 respondents were asked the same questions but their story read differently and in this instance John rented the property.
The two groups were asked what words they associated with John’s current living situation and while 60 percent believed that it was responsible to own property, forty six percent of the other group said that the decision to rent property was unwise. Interestingly, 46 percent of those polled about the rental scenario related the word affordable with rental property although 27 percent of the same group did believe that the decision to rent rather than buy was irresponsible.
Most people rent property at some stage in their lives and while this may be viewed as acceptable when you are young, the perception it seems, changes as we get older. There is a good reason for this. Generally speaking, renting property is often cheaper in the short term, however, bankrolling another person’s asset over a lengthy period of time will end up costing the tenant far more in the long run.
There are of course different reasons why people rent property. For many it is a case of affordability. Ask anyone who has bought a new home and most will tell you that the first couple of years are financially tough. In addition to the deposit and costs associated with buying a new home, there are a number of hidden expenses. Homeowners are also at the mercy of the banks and if the interest rate goes up, they have to pay more on their monthly instalments, unlike tenants whose rent traditionally only increases on an annual basis.
In the long term, however, homeowners hold all the cards. In addition to the stability that homeownership brings, they also have a tangible asset, which, if handled correctly will lead on to bigger and better things. We all want the finer things in life and although most of us start small, experience shows that the earlier people invest in property the sooner they are able to afford their dream home.
There are risks associated with renting. Nothing is definite. Moving home because you have found something bigger and better is one thing, moving house because your lease has come to an end is another. In addition to paying off a bond, homeowners can boost the value of their home by making improvements. Tenants may be encouraged to make changes to their living conditions, but under South African law tenants who improve their rented homes have to leave anything that is regarded as a fixture behind when they move.
While the results of the survey reveal that most people accept that young people are going to rent property, this perception changes as people get older. The fictitious person who rented property in the story was 35 years old and 37 percent of those polled associated words like unwise, risk and irresponsible with this particular scenario. Only one percent of those who answered the same question in the belief that John owned the property associated the same words with property ownership.