Hyderabad: After securing his dream job at 22, Srinath Rao was clear that he will work till 27 and get married only when he buys a house. He has been living in a rented apartment that is closer to his office and finds it quite convenient in terms of commute.
He also does not have deal with the struggle of paying EMIs, property taxes and recurrence costs in terms of maintenance of the house. In addition, he does not have to stick to just one home and can always move into a newer home if he gets a good deal.
However, he is also aware that owning a property is a good investment option at this juncture of his life as he will be able to get home loans for lower interest rates and can have a property of his own by the time he hits 50.
“This dilemma of owning or renting a property has been playing in my mind for a long time now. While on the one side it is a good investment option to buy a property, on the other, it binds you to that particular location and does not give you the flexibility of moving cities for newer job opportunities. On the flip side with rental properties there is always a fear that the owner might tell you to vacate even though the cost of living in the house is much lesser than owning one,” says 28-year-old Rao who works in a MNC in Hyderabad.
According to an expert, property buyers in Hyderabad are in the age group of 25 to 35 years, accounting to 39 per cent of the total share and more than 60 per cent of buyers are aged above 35 years. Most property dealers are now seeing as much as one-eighth reduction in the number of prospective tenants enquiring for rented places after the pandemic.
“The choice to buy versus rent a house is case-to-case specific and depends on the property users’ dynamics like workplace, social circle, personal and family profile, and monetary considerations. Culturally, however, there has been a penchant to own a home in India. The financial spread between a buy v/s rent decision is lowest for the house buyer. Coupled with improvement in quality of product and regulatory comfort of RERA, end users would find it a good time to buy a house,” says Vivek Rathi, director, research, Knight Frank India.
“The newer shift has been towards buying one’s own property with remote working opportunities gaining prominence and discounts as part of incentives by property sellers,” says Dr Boodati Lakshmi Narayana, founder, Sahiti Group.
Pros of renting a property:
Compared to rent yield and house mortgage rate, renting is cheaper compared to purchase of house property. While rent yield ranges between 2-3 per cent per annum which when compared with house mortgage that ranges between 6-7 per cent per annum. The cost of ownership in terms of recurring costs ranges from 0.5 and 1.5 per cent per annum of the market value of property. This can potentially be saved by a renter, Rathi explains.
“Renting a property comes with the flexibility to choose from a wider options and the ability to switch a place. Besides these, it also eliminates saving up a huge amount or heavy EMIs that would be needed to buy a property,” says Narayana.
Pros of owning a property:
Home purchase provides financial benefits like income tax saving on account of specified home loan principal repayment and interest payment. Home ownership is associated with providing stability and security in difficult financial times.
Narayana also informs that owning a property also brings the ease of customising the place as per the owner’s needs without the struggles of a landlord’s permissions. With housing loan rates reduced this year by many private sector banks, owning a property is easier even for non-salaried buyers.