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From the Director's pen
26 February 2021  | Wian Pienaar
 

Is now the time to buy or rent?

In the current South African climate, the lockdown still lingering around us for who knows how long and with the low- interest rate, there is currently a huge debate around whether it is cheaper to buy or to rent a home.

Owning property can be greatly beneficial over a long period and property is certainly a worthy investment of your money. It is fair to say that it is a buyer’s market and if you are in the market to buy your first property or to buy property as an investment, now would be the best time to do so. Just remember that buying property includes additional costs that you will need to cover such as bond registration costs, transfer costs, transfer duty to the Receiver, insurance premiums and even the costs of renovating or upgrading your new property, if necessary. All these costs can add up to a substantial amount for the first-time buyer. Likewise, you will have to remember that interest rates, although low now, can fluctuate over time and you need to have the financial stability to accommodate such fluctuation and the other associated costs with owning and maintaining a property.

In comparison, renting can be far cheaper and, in some ways, simpler and more flexible option for many. However, by renting you are helping the landlord pay off his mortgage and increasing the value of his investments and not your own. You are also at the mercy of your rental agreement in respect of what you can and cannot do with the property.

Just as much as renting and buying clearly has pros and cons, each of us have our own individual needs and circumstances in making the decision to either rent or buy. Here are a few useful factors to consider when deciding on which option may be better for you:

·        How long do you plan to live in the same place?

·        Compare the costs of renting vs buying?

·        What is your view on your financial position going forward?

·        What will your space needs be in a few years? (family, pets, cars, etc.).

·        What are the risks for you in buying or renting?

 

I believe that as soon as you are able to purchase your first property you should do so; you will be thankful in a few years’ time although it might feel like a huge commitment at the moment. If you are able to, this is definitely the right time to consider your options.

Wian Pienaar

 
 
 
 
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