Bhg
  • Shop
  • News
  • Food
  • DIY
  • Garden
  • Renovating
  • Decorating
  • Health
  • TV
  • Hard to Find
Bhg
  • Shop
  • News
  • Food
  • DIY
  • Garden
  • Renovating
  • Decorating
  • Health
  • TV
  • Hard to Find
Subscribe
  1. Home
  2. Finance

The pros and cons of renting versus buying

Make an informed decision. - by Laura Barry
  • 10 Jul 2018
The pros and cons of renting versus buying

Whether you’re a renter or prospective buyer, there is no right or wrong decision when it comes to property. Both options have positive and negatives aspects but deciding which situation best suits you ultimately comes to down to evaluating your financial means, your lifestyle, where you are in life and what your personal goals are.

According to findings by the 2016 Census, 30.9 per cent of Australians are renting. In Sydney more than half of households are renting and the Melbourne percentage of renters isn’t too far behind. Across Australia, the same Census results found that just 31 per cent of Australians own their home outright, and 34.5 per cent own a home but are currently paying off a mortgage. Regardless of which option you choose, you certainly aren’t alone.

Read on for a no-nonsense pros and cons list of renting versus buying.

Couple sitting on rug in empty home
Getty

Renting

Pros

  1. You have the flexibility to move as often as you want, to where ever you want. If you dislike the new developments in your area, or an up-and-coming suburb offers the lifestyle you want, you can move as soon as your current lease is up.
  2. Maintenance and repairs are included. If paint peels, the oven stops working or there’s a leak in the roof, it’s up to your landlord to get it sorted quick smart – at no cost to you.
  3. You can live in areas you couldn’t afford to buy in. In some areas, it’s cheaper to rent a property than it would be to buy and make mortgage repayments. The benefits of a better location may mean access to better schools for your children and public transport.
  4. As renting can be significantly cheaper than making mortgage repayments, renters may find themselves with a surplus of cash that allows them to either indulge in life’s little luxuries, save or invest.

Cons

  1. The money you spend on rent essentially disappears into the pocket of your landlord, never to be seen again. You aren’t building any equity or working towards paying off an asset.
  2. Your rent can increase year on year, regardless of whether you move or if the property is maintained.
  3. Getting repairs and maintenance taken care of in a timely manner can be a challenge if you have a lacklustre landlord or property agent.
  4. Your ability to decorate and make the home your own is limited. You will need permission to paint anything, hang shelves or pictures on the walls or have pets.
house keys on keychain
Getty

Buying

Pros

  1. You begin building equity from the moment you purchase property and start paying it off.
  2. It offers stability and the freedom to decorate and renovate as your heart so desires, within your available budget.
  3. You can increase the value of your property buy making small improvements.
  4. Your property is your home and what you do with it is entirely up to you, from starting a family to having pets, building a fence or planting shrubs.
  5. You can use the equity in your home to fund an investment such as shares or a managed fund.

Cons

  1. Long term financial commitment means that while your home will be an asset, it will take years to see the returns on it, and you’ll be paying interest and fees over the life of your loan.
  2. You will be committed to your location. Although you can change anything you like about your property, you can’t change its location. Noisy neighbours, new bars, clubs or shopping precincts opening up near your home will have to be endured.
  3. You will need to put down a large deposit on your home, which sometimes means years of saving and budgeting to meet the minimum requirement.
  4. All the maintenance, repairs, rates and bills are your burden to wear alone, you need to ensure you are ready for that commitment.

The third option

Rent-vesting

If you can’t afford to buy in the area you want to live, but you want to invest in a property, rent-vesting is a good idea. Buy in a neighbourhood that is affordable and likely to be a good investment, and rent in a more convenient or desirable location. It’s more affordable to rent in an inner-urban area than to purchase there, so by buying an investment property that you can afford, and continuing to rent close to work, near the beach or in the city, you won’t be compromising your lifestyle. This option is good for people whose lifestyle or work situation isn’t permanent, if you aren’t sure where you want to settle or you don’t see the burden of a large non-tax deductible mortgage on your home as the best use of your money.

You might also like:

The most affordable suburbs for first home buyers 

Property experts say Sydney house prices will drop this year 

Millennial solutions to housing affordability 

  • Finance
  • Better Life

Treat yourself to a subscription-Save up to 25%

Plus, your chance to win

Subscribe Now
Treat yourself to a subscription

Treat yourself to a subscription-Save up to 25%

Plus, your chance to win

Subscribe Now
Treat yourself to a subscription

Recommended to you

YOU’LL NEED A WEDGE TO HANG THAT DOOR
Watch 6:32

YOU’LL NEED A WEDGE TO HANG THAT DOOR

{headline}

{headline}

11 expert tips for first time home buyers

11 expert tips for first time home buyers

What you need to know before bidding at auction

What you need to know before bidding at auction

The Aussie city with the cheapest house price has been revealed

The Aussie city with the cheapest house price has been revealed

7 ways to boost your borrowing capacity and land your dream home

7 ways to boost your borrowing capacity and land your dream home

{headline}

{headline}

Kerching! How to add value to your home before selling

Kerching! How to add value to your home before selling

Two-thirds of house hunters are put off by this one feature

Two-thirds of house hunters are put off by this one feature

3 ways to pay off your home loan faster

3 ways to pay off your home loan faster

{headline}

{headline}

The upfront costs that hit the hardest when buying a house

The upfront costs that hit the hardest when buying a house

How to negotiate with a real estate agent

How to negotiate with a real estate agent

The difference between baking soda and baking powder

The difference between baking soda and baking powder

5 tips that will help you buy your first property sooner

5 tips that will help you buy your first property sooner

The one product you should never travel without

The one product you should never travel without

How to pick the perfect Secret Santa gift

How to pick the perfect Secret Santa gift

Style tips to make a small room more spacious

Style tips to make a small room more spacious

Bhg
  • About Us
  • Subscribe Today
  • Contact Us
  • Terms and Conditions
  • Privacy Policy
Bhg Magazine Subscribe
  • About Us
  • Subscribe Today
  • Contact Us
  • Terms and Conditions
  • Privacy Policy

Brands

  • All Recipes
  • BHG Shop
  • Girlfriend
  • Home Beautiful
  • New Idea
  • New Idea Food
  • Practical Parenting

Our Network

  • marie claire
  • Beauty Crew
  • Who
  • Women's Weekly Food
  • Bounty Parents
  • That’s Life
  • Perth Now
  • The West Australian
  • 7Plus
  • 7mate
  • 7NEWS
  • 7Sport
  • Sunrise
  • Starts at 60
  • Hard to Find
© 2022 Are Media PTY LTD
All products are independently selected, tested or recommended by our team of experts.If you buy something, we may earn an affiliate commission.
Get more from Better Homes and Gardens

Magazine Subscription Offer

Treat yourself to a subscription-Save up to 25%

Shop This Offer
Treat yourself to a subscription