Should you rent or buy?
Which one makes more sense, buying or renting property?
It depends! Over the years we have seen many different types of tenants. Some rent large upmarket homes for R55,000/month over two years, while others on a tighter budget just want a 1 bed flat for 6 months for R5,500/month.
Of course we know that in the long term it usually makes sense to buy. You own your appreciating asset once all debts are paid off, and can rent it out as an investment too! But remember, if a long term bond is taken out over the property, you will find that you have paid the bank around twice the original price of the property. Nevertheless, that might be preferable to paying off a landlord’s bond.
That said, there are many reasons why you might consider renting, sometimes over a very long period of time.
If you’re moving into town in a hurry and aren’t familiar with the traffic flow, or you have put your kids into a school that you’re not acquainted with, or your office may move premises to the other side of town at any time, you may want to consider renting.
There are other benefits to renting you may have overlooked. For one thing, it’s usually cheaper! Rates and taxes, refuse, levies or home owners’ association fees and security fees are almost always paid by the landlord. And in sectional title schemes, water is usually included in the landlord’s levy.
Another benefit to renting is in regards to maintenance. Say for example, a tree falls and damages the perimeter wall creating an opening onto the street, or a strong wind dislodges some roof tiles and water is seeping into the property, the landlord is accountable for the entire cost and effort to repair. (However, the terms of a lease agreement may hold the tenant liable)
With benefits come risks. A tenant may, one fine sunny day, find that his water and/or electricity has been cut off, or worse, he finds a letter from the bank stating that the property will henceforth be sold through a sale of execution. These issues may arise when a landlord fails to pay his debts to the body corporate, municipality, City Power, or the bank that mortgaged his property. Tenants should therefore request or insist that landlords prove, on a month to month basis, that they are paying their accounts.
Of course it’s usually not doom and gloom! In my personal and work experience, I have found that in the vast majority of cases, tenants that respect their obligations to their landlords get respected right back, and a wonderful “property partnership” is established.
Author: Denese Zaslansky