Buying a house helps in getting the permanent ownership of the property to the buyer. While taking a flat on rent does not enable any ownership of the flat, though whatever rent is paid to the landlord. The ownership of the house can be transferred from one generation to another, and the property can go for redevelopment with higher FSI granted to the same property. Thus once the property is purchased, the owner is never lost until the owner does not sell the property. The property, once purchased, can be sold at a higher price to another owner as and how the price of the property rises. The property prices keep on increasing every year on year basis. There are very rare circumstances wherein the property prices may go down due to slack demand for the property. But on a usual basis, there is always an upward trend in the market for real estate. Even in the case of the rent, the rentals usually go on increasing after every 11 months of the agreement. However, ownership can never be gained for the rented property. An increase in prices thus later forces the person to buy the property at higher rates.
The loans from the banks are easily available for the tenants at competitive interest rates. Also, the interest rates are getting reduced gradually as the repo rate of RBI is declining. Thus homes can be purchased at attractive interest rates. Also, the loans can be taken at a longer tenure of a maximum of 30 years. Thus in the case of affordability, buying an owned property is better than renting the property. The interest rates for home loans start at 6.50% onwards, which is charged cumulatively to the borrower. The purchase of a home enables the buyer to gain permanent ownership even if the building becomes dilapidated. The ownership of the plot is divided between the owners of the building. And in the case of the bungalow, the ownership is of the single owner. But even in the case of a building, the ownership of the plot is divided, which can yield higher returns on investment. But the investment never goes to waste. Also, the prices of the property are non-volatile. As in the case of the stocks, gold investment, and mutual funds, the investment is volatile wherein the prices can go soaring high or sometimes may come down drastically.
Buying a house Vs. Staying on rent:
- The rented apartment yields any returns on investment to the tenant, while as in the case of the ownership of property, the owner can get increased value on the property once purchased.
- In the case of the rented apartment, the tenant has to spend money to stay in the flat but does not gain anything, while the owner, by choice, can stay in the apartment or give it on rent and thus gain monthly returns on investment.
- The ownership can never be lost even if the person dies; other family members retain the ownership of the property. While as in the case of rented property, the ownership can never be gained.
- Due to inflation, the tenant losses more money as the prices of the property increase. While as the owner gains returns as the rent received increases and for sale, the value of the property increases.
- The ownership can be transferred to the next generation in the case of the owned property, while the owners can neither be gained nor transferred in the case of the rented property.
- In some societies, owners are charged lower society maintenance than the tenants. Thus the owner saves money in society maintenance in case of ownership of the flat.
- Loans are available easily for paying the EMI’s. In contrast, the tenant cannot gain any external source of funding for paying the rent.
- Tax benefit can be gained in case of property purchase and on the installments paid for the home loans. While as for rental payment, there is no tax benefit being provided.
We can conclude that having an owned property is always beneficial than staying in a rented apartment. The property buyer gets over-burdened in case of the purchase of the property. But the one-time investment can yield fruitful returns to the buyer, which is not the case in rented apartments. Also, permanent ownership benefits the future generations, which helps them gain returns through inheritance.