It’s the age-old question: should you buy or rent property? If you’re new to the South Africa property market, it’s a daunting question, and you worry that the wrong choice could ruin your property dreams. On the one hand, rental money may feel like money wasted. However, considering the unpredictable nature of current interest rates, you may have concerns about buying property.
Seeff recommends weighing the pros and cons before you buy or rent property today.
Samuel Seeff, chairman of the Seeff Property Group, states that your budget is the biggest factor to consider when buying property. If your credit score is good, you are reliably financially secure and capable of making loan repayments timeously, then buying a house or flat is a great idea.
A key benefit to buying residential property is that it’s a fixed asset, likely to increase in value over time. Fluctuations in the economy and the interest rate will affect your mortgage repayments; otherwise, they will remain the same month to month. Mortgage repayments are only subject to interest rate fluctuations but will otherwise remain stable.
If you sell your investment property later, you could also reap a sizable profit - if you are wise about when you choose to sell.
However, there are disadvantages to buying property. It’s not a liquid asset and can take considerable time to sell. The profit you stand to gain from selling your investment property is also dependent on the state of the property market and how long you have owned the property. If you have not had the house or flat in question long enough, you will not have accumulated much capital growth.
The value of your house also depends on the state of the surrounding area, which could decline at any point in time, reducing demand and subsequently affecting the worth of properties. In other words, buying property is a long-term commitment, whereas renting offers flexibility.
Renting is often more financially viable than buying property. In an area where investing in property is not affordable, renting property allows you to experience the area without making a commitment.
Many individuals and families take on rent-to-buy contracts to slowly transition from tenants to owners. Renting in one area and buying property in another is a common arrangement, allowing for more flexibility.
Another benefit to renting is that property maintenance costs will be minimal for tenants; however, these services are not always adequate and dealing with disinterested or cheapskate landlords can be taxing. Furthermore, your money will go towards paying off someone else’s property investment, and you will have nothing tangible to show for your money when your lease is up.
Another disadvantage of renting is that you won’t necessarily have permission to alter the property and customise your living space. Nails, shelves, picture hanging, and more could cost you your rental deposit when you eventually leave.
Yearly increases in the monthly rent are expected, and in the long run, it usually costs more to rent than buy. While owning your own property gives you security and stability, there is also no long-term guarantee that your landlord will repeatedly renew your lease. They might decide to sell the property, and you’ll need to find another home quickly.
At Seeff, home is our story. We would love to help you start the next chapter of yours. Don’t let the big decision of whether to buy or rent stop you from making a move. Whether you want to buy or rent property, contact us, and we can help you.