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There’s an old saying: rent money is dead money. But with the current state of the housing market, is that really true anymore?
In recent months we’ve seen an increasing number of articles suggesting that due to the skyrocketing price of homes, it could make better financial sense for some younger people to continue renting rather than buying a house.
At Rising Tide, we believe there’s no simpler answer. There’s a lot to consider. In a two-part series, we’ll look at both the pros and cons of renting, to help you decide which is best for you.
Today we’ll focus on the downsides of renting over buying, and consider some important reasons why there is a large number of young Aussie’s aren’t yet ready to let go of the dream of owning their own home.
Lack of stability
Renting will never provide the same stability as owning your own place. Most landlords will offer a lease agreement for a 12-month period, which when you think about it, isn’t really a long time.
Some renters are able to secure longer leases, but these are a rare find. Those that aren’t so lucky may find themselves having to move houses within a year’s time in the event that the landlord chooses to sell the house or decides they’d like to occupy it.
Having to pack up your whole life and find a new home, sometimes with no more than two months’ notice, can be an enormous disruption. It’s even worse for those who have kids.
Lack of control
The lack of control is something that many tenants struggle with. For most people, they quickly begin to see the property as their home. Yet because someone else owns the house, there’s a long list of rules and regulations regarding what they can and can’t do.
When it comes to repairs, there’s a range of things the landlord is responsible for keeping well maintained, like the water system, the toilet system and essential services (hot water, heating and air-conditioning, etc). Should these things breakdown, the landlord or property manager is responsible for seeing to their repair.
However, this isn’t always as straightforward as it sounds. Although the Residential Tenancies Act (1977) protects tenants rights, it’s not unusual for tenants to experience frustrating delays.
While renting may seem to be the more cost-effective option in the short term, in ten years time you’ll have nothing to show for those tens of thousands of dollars you’ve spent paying off someone else’s mortgage.
Data from the Australian Bureau of Statistics (ABS) shows that house prices in Melbourne and Sydney have increased 10% in the last 12 months, but there’s no solid evidence to suggest that prices will drop anytime soon. Likewise, there’s no way to guarantee that prices won’t continue to grow.
At Rising Tide, we know that saving for that first home deposit is getting harder and harder, but we’re here to help.
Don’t forget to check back next fortnight to read our post on the pros of renting!
Whatever your goals, we can work with you to set up a clearly defined savings plan and provide advice on how to best move forward. Call us today on 03 9600 2124 to find out more.