Renting Apartments, Flats or Homes
A Flexible Lifestyle
Renting Apartments means that you pay (usually monthly) for exclusive use of property. When you want to move somewhere else, or when the lease expires, you simply move out (subject to certain restrictions/conditions).
When you are renting apartments you are only paying for use; ownership remains exclusively with the owner of the property.
Main Advantages
Renting has a number of advantages, such as:
- it is usually quicker and easier to move in and out of rented accommodation
- lower initial costs, not needing a deposit on a house, and not involving as much expense (eg: surveys and other fees)
- freedom, you can move when the lease is expired
- it can be a way of living in areas where you can't afford to purchase
- you are free from responsibility for the structure of the building
- there is less risk because, for example, monthly rental costs are fixed, you aren't normally liable for structural problems that occur, and you won't get into 'negative equity'
- overall there is less work from your point of view
- You can choose how to invest any money saved by renting (eg: in a tax-saving ISA)
Case study
Amanda is a up-and-coming manager in an international consulting firm whose philosophy is to "work hard and play hard". To develop her career, every year or two she has to move to another major city, sometimes in a new country. Ideally she wants to live close to work and the entertainment areas of the city.
Although Amanda has plenty of money to buy somewhere to live, she rents her accommodation so that, whilst retaining independence, she has maximum the flexibility to move and minimises time-intensive activities that might distract her from her work or social life. Amanda invests her spare cash in a managed property fund. This makes financial sense to her because she doesn't have sale/purchase costs when she moves, but she is still able to benefit from the increases in the property market.
Main Disadvantages
The disadvantages of renting can be:
- Your monthly rental payments do not contribute to a growing asset.(When comparing this with buying your home, remember that interest payments do not contribute to a growing asset either, only the capital repayments which are often the smaller part of the monthly payment).
- You cannot make structural changes or improvements to the property
- You will not get any financial benefits from any improvements you do make (eg: better decorating)
- You may have restrictions on what you can do in the property or how you can use it (eg: pets may not be allowed)
- Sometimes, rental is more expensive that purchasing a property (this depends on local market conditions)
- There may be other conditions of the lease that you have to observe
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