Buying a house versus renting a house - it’s probably one of the most heated debate when it comes to making the best financial sense. Not surprisingly, this dilemma is not exclusive to Malaysia. It is an argument that is shared universally.
Contrary to popular belief, the decisions at this juncture are not based on financial grounds alone. Other factors should be taken in equal measure with monetary concerns, no matter how secondary or tertiary they are on paper.
Let’s take a look at the pros and cons of buying and renting a house:
Why should you buy a house? :
1. Sense of ownership
This is by far the most coveted milestone in everyone’ financial journey. What else could be more rewarding than to have a roof above your head that is under your name? In Malaysia and most Asian countries, owning a house is considered a symbol of achievement.
Seeing your dream house materializes will be like…
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2. Freedom
The appeal of being your own boss in your household will never get old. You could redecorate and make renovations (as long as the renovations are approved by the local city council!) at your heart’s content without having to ask for permission from a landlord. You are in charge of how you want to shape your property.
3. Investment
If you want to have a long-term hedge against inflation, owning a house is your best bet. Furthermore, if you managed to score a right house at a prime location, you’ll hit the jackpot in the long run with capital appreciation of the house. Or, you can either rent it out to enjoy an additional income pipeline.
What’s the catch of buying a house? :
1. The hidden cost of ownership
You can't avoid the legal process of house ownership, can you? The selling price and monthly mortgage are only at the tip of the iceberg. Before you even hold the key to the house, you have to walk through the fire of legal fees, stamp duty, and insurance...which can accumulate up to 5 figures in total. Yikes!
That face when you see the hidden cost
Image via MaltheM/imgur
2. Better make sure you’re staying for a long time
What if suddenly you’ll find yourself in a tricky situation where you have to let go of your house for whatever reason? Or you’re looking to make a quick gain from your house’s rapid capital appreciation? If so, you better get used to this 4 words: Real Property Gains Tax (RPGT). If you’re planning to sell off your house within 5 years after you purchased it, be prepared to fish out extra cash for the Inland Revenue Board.
Why should you rent a house? :
1. A nomadic lifestyle
Does your work commitment require you to move around the country regularly? Then you’ll be better off with renting. The general rule of thumb stipulates that you shouldn’t buy a house if you’re staying in a particular location for less than 5 years.
2. Opportunities in other investment portfolios
Just like we’ve mentioned, owning a house is an excellent asset for investment. But the world is far bigger than that! Different investors are built from different bricks, and you may get a kick out of other investment vehicles and their profits.
3. Passing the maintenance buck to someone else
Is DIY not a part of your repertoire? Do you usually end up making things worse when you fix something, like plumbing and wall cracks? Then rejoice, because your landlord is responsible for the house’s maintenance and its cost! A piece of important advice, though: don’t break stuff on purpose, because that will be on you!
I have no idea what I’m doing
Image via gifer
What’s the catch of renting a house? :
1. The absence of renting laws
If your landlord says “I AM THE LAW!” in the middle of a discussion or negotiations, chances are he/she means it. Did you know that until today, there are no laws in place to protect the interest of tenants and landlords? This means you’re at the mercy of the landlord, such as a sudden hike in rental rate. Simply put, you don’t have much legal grounds if you were to challenge your landlord in a court.
Better hope the negotiation doesn’t come to this!
Image via delusionalheel/tumblr
2. Lack of ownership
You may be living in the rented house 24/7, but your landlord has the final say of the rules that govern the tenancy. Fancy bringing along your dachshund as your company? You’ll have to ask for the landlord’s permission. Want to hang artworks on the wall? That’s a cause for a chat with the landlord. Need to install additional air-conditioners? Still a yes or no from the landlord!
Use our for and against buying or renting to guide your decision making. Just remember to do your due diligence before determining the best option.
If you have zeroed in on a decision, don’t forget to download our app to kick start your moving day details with our lorry service!