What is best: Renting, buying or building a house?

When the need arises for a new roof over your and your family’s heads, you need to consider three ­options:

1. Renting
2. Buying or
3. Building a house

each option has its own merits and drawbacks.

Renting a house

When renting accommodation, it may be true that you don’t need much of a capital outlay, and that you can relocate quite easily, but it also means that you don’t own a place of your own. Every rand you pay in rent simply goes into somebody else’s pocket, and your dream of owning your own place keeps slipping further and further away. Any escalation in property prices is to the benefit of the property owner, while you as the tenant simply have to pay a higher rent.

The benefits of renting a house:

• No capital required
• Flexibility in terms of locations and rental periods
• Most of the maintenance costs are carried by the property owner
• Quick change-over between properties are possible
• There are no risks to the tenants - worst case you might have a tough time getting your deposit back from the owner, or possibly disagree about the amount, but that's it.
• No insurance required for your property
• The taxes are paid by the property owner, so he carries the risk of the taxes being increased.
• Often there are other services included in the rental price, including levies, wifi, parking, electricity, water, etc.

However, when renting a property you have to take what you get.  There is often very little room for negotiation. 

Buying a house

When buying a house, some initial capital of your own will be required, but all price escalations in the housing market will be for your own benefit.

Buying a house is one of the largest transactions you will ever do; so it is no light matter.  

The benefits of buying a house

• The value of property generally increase continuously
• The property will always remain your asset
• There are several tax deductions that can be done on your home loan payment.
• It is more far more permanent than renting
• The site is usually already established and well-lived in, which makes it a more comfortable space to live in.
• You can make changes to the layout and structures
• You are not subject to the decisions of the property owner
• The fixed-rate of the home loan repayment make it easier to do long-term financial planning.

For many years in South Africa it has been cheaper to buy an existing house than to build a new one, especially if you have been fortunate enough to find the house of your dreams with an established garden, paving and a pool, located in the area in which you want to live. However, you are very fortunate if you find a place that complies with all your requirements!

Building a House

This is obviously everyone's dream; to have enough money to buy an empty piece of land and build the house of your dreams.  The dream sounds perfect, but unfortunately building a house is not easy!

The benefits of building a house

• Control over every detail of the design
• You get exactly what you pay for, no more, no less
• You have more control over the location of your house
• The spaces are designed to fit your specific needs
• Everything is new
• Lower maintenance cost initially
• All the benefits of buying a property in terms of long-term asset, no third party involvement, permanence, etc.

We have all heard about the heart ache, financial losses and time overruns on building projects.  This, unfortunately, happens because everyone thinks that it is easy to build and they can do it themselves.  A building project must be managed very vigilantly.  It is strongly recommended that a professional be appointed to assist home-builders with their building projects, to ensure you achieve your goal of owning the property of your dreams.