Buying vs. Renting a Home in India: Pros and Cons

A home not only offers shelter and safety but also emotional security. It is a place where we feel emotionally comfortable and retreat from the challenges of daily life. There is a saying that goes like this: “Home is not a place, it is a feeling.”

Every Indian aspires to possess a home they can call their own. However, due to increasing property rates and market volatility, people could not decide whether to buy or rent a home. 

This blog post delves into the old-age debate of buying vs. renting a home. We will conduct a rent vs. buy analysis and discuss their advantages and disadvantages.

Before we jump into renting vs. buying a house, let’s analyze the Indian real estate market.

Indian Real Estate Market Overview 

Understanding the real estate market is crucial when considering buying vs. renting a home.

The research concludes that the Indian real estate market could reach up to $828.75 billion by 2028. According to the report, the compound annual growth rate will remain 25.60% between 2023 and 2028.

Since the Indian real estate market is vast and varied with different regions, you will notice diverse trends throughout the country. 

Some crucial factors to consider include:

Price of a Property

Property prices vary in India based on location. For example, property prices are higher in metropolitan areas compared to smaller towns and cities. The cost also fluctuates due to factors like infrastructure development and growing demands.

Rent Trends

In cities like Bangalore, Delhi, and Mumbai, rental prices are comparatively high. Nearby healthcare facilities, and the local job sector control rent trends.

Types of Property 

In India, you get various property options, such as flats, villas, apartments, independent houses, and more. You can choose them based on your budget and lifestyle.

Loan Interest Rates

Individuals looking for home loans must keep an eye on current interest rates. Home loan interest rates can considerably influence the price of homeownership.

Buying vs. Renting a Home: Pros and Cons

Advantages of Owning a Home

Equity and Ownership

Owning a home is an emotion in India, especially if it is a first home. The sense of ownership provides freedom, security, and stability. In addition, buying a home is an opportunity to build equity over time. You can see it as a long-term investment. As the property value increases over time, it becomes a profitable asset.  

Stability

When you own a house, it gives you a sense of stability. You don’t need to worry about lease renewals and frequent relocations. Furthermore, it gives you financial stability. Some individuals buy a home to rent it and make a consistent earning.

Tax Benefits

The Indian government provides numerous tax benefits to homeowners. If you take a home loan, you can claim tax benefits under sections 24(b) and 80c in the Indian Tax Act. You will get deductions on home loan interest and principal repayments. It will minimize your overall tax liability naturally. 

Personalization

Owning a home gives you the liberty to renovate it. You can decorate your home in a way that reflects your lifestyle. With a rented house, it is not possible entirely.

Sense of Ownership

Undoubtedly, buying a home gives you a sense of ownership, and that brings emotional satisfaction.

Disadvantages of Owning a Home

Initial High Cost

The financial aspect should be a vital factor in your renting vs. buying decision. Owning a house requires making a considerable down payment. Besides this, you will have to pay for a registration fee.

On-going Maintenance

Buying a home comes with ongoing maintenance and repair responsibilities.

Market Volatility

Like any industry, the Indian real estate industry can be volatile due to economic factors and local market conditions. Though inconsiderably, market volatility can affect your property values.

Property Tax

Depending on the city you want to buy a home in, you will pay a certain amount of property tax.  

Advantages of Renting a Home

Financial Flexibility

Renting a home in India does not require a high upfront cost. You pay a fixed monthly rent to your landlord. 

No-Property Tax

Since you won’t be making equity by renting, you don’t need to worry about property-related taxes. Your landlord will be accountable for it. 

Mobility Flexibility

If you’re into a job that requires you to move to different locations, renting a house is a comparatively good choice.

Cons of Renting a Home

Limited Control

Renting a home does not give you adequate control over your living space. You can’t renovate or make changes to interiors until you have your landlord’s approval.

Continuous Increase in the Rent

Your landlord might upsurge the rent with the end of each lease term. Over the period, it can lead to higher housing costs.

No Equity Building

Paying monthly rent does not build equity as payments will add to the landlord’s wealth. Since property rates continuously increase in India, you will miss the opportunity for wealth creation.

Should I Rent or Buy a House? 

Below are some factors that can influence your decision:

Financial Situation

Do you have adequate savings for a down payment? If yes, buying a home is a good choice anytime. Ensure you have a stable income to pay monthly installments of the loan.

Long-term Plans

Owning a house is financially beneficial when you stay in one place for an extended period. On the other hand, renting is an ideal choice for individuals whose lifestyle involves frequent transfers. So consider your long-term plans.

Financial Goals

If you want to buy a home as an investment, it can build good equity over time. If you have access to other high-return investment options, it makes sense to invest money there.

Condition of the Real Estate Market

Choosing between renting vs. buying a house also depends on the current market condition. If property prices are stable or falling, you can leverage this opportunity. Otherwise, you can wait for that time.

Conclusion

In this blog post, we discussed the factors that might come into play when determining buying vs. renting a home in India. We explored the disadvantages and advantages of renting a house vs. buying one. It is advisable to evaluate your financial condition and determine your long-term goals before making a decision. If you want to own a house in Hyderabad or Bangalore, explore our latest property listings.