It is the dream of every Indian to own a home. But when it comes to buying a property you need to do the math carefully, especially if you consider it from the point of view of a long term investment. Though owning property may be a dream of every Indian, the skyrocketing prices of the property in NCR and Metro regions have led most Indians to rent property instead of buying one.
For people who can afford to invest in or purchase a home, the choice between renting and buying a property on sale in India is always the most complicated one. It is noticed that people who are capable of buying a home in India usually prefer to buy a home rather than live in rented accommodation. They tend to view rented accommodation as a compromise meant for those who cant afford to buy a home!
But, in reality, both the options have their own pros and cons which are summarized below to help you make the right and informed decision.
Benefits of Buying Property over Renting Accommodation!
Buying a home in India rather than renting gives the homeowners a sense of security and they take pride in being the owner of the property. In metro cities and the NCR region, the renting option is very costly and expensive and it is incurred every month without creating physical assets out of it.
So, by paying monthly installments people have dual benefits – it offers them a place for shelter or accommodation and they also gain proportional ownership in the property. Renting a home is not a permanent accommodation and you have to relocate or shift after the termination of the rent agreement.
This is a total wastage of money and time. But this is not the case when you buy a property. Plus real estate investment is always considered the safest investment that is backed by a real asset that has the potential for price appreciation as well as tax benefits.
Why Rent an Accommodation rather than Buying one?
When you rent a property you are not overburdened by the monthly payments, house taxes and all other legal issues that are the part of being a property owner.
Renting also lowers the feeling of liability and in metro cities and NCR, you can rent 3 BHK Flats worth Rs. 50-60 Lacs with a monthly payment of Rs. 10000 or Rs. 15000. If you buy the same apartment or flat you have to shell out additional 40,000 to 50,000 as EMI or Equated Monthly Instalment.
When it comes to renting the property, you have the option to rent any accommodation that is close to your work, good schools, or other recreational hubs. Buying such property might not be within your reach or affordable, but by renting it you can enjoy all the benefits without the burden of monthly EMIs and other liabilities that ownership may impose on you.
Final Thoughts on Whether to Rent or Buy a Property!
Based on the above-mentioned details and information, the choice between owning and renting a property in India is really a tough one. Only with a thorough analysis you can reach a proper conclusion and decide which option is best for you.
In order to compare and analyze renting and owning property, the first step is to evaluate the investment returns on down payments as well as costs that are incurred upfront when buying 3 or 2 BHK flats in India.
The second major step is to evaluate the investment returns of the difference between EMI payments and the rent over the complete duration of the ownership. If the down payment of the property is Rs. 10 Lac and other capital outlay is 9.4 Lac, then the total overtime capital outlay would be around 19.4 Lac.
Therefore, the returns on the lump sum investment would accordingly be 12% and the returns on monthly investments would be 14%. So, at the end of the fiscal year, you would gather around Rs. 3.59 Cr, if you opt for the renting option. This is something 1.5 Cr higher than the total value of the property over a period of 20 years.
Conclusion
So, it is clear that renting a property in India is a better option, but it may not prove to be a good option under certain market conditions. The Indian real estate market keeps on going through a period of inflation with Tier-1 cities and metro regions showing some softness in prices. So, for people who are planning to buy a home now it is suggested that unless they buy it for accommodation, investment in the property today is not a good option.
Author: Harshita Jain
Harshita is a well-known copywriter for PlanMyProperty.in who loves to write about real estate. She eagerly waits for the right travel opportunity and captures her experience in words and publish them with partner blogger friends.
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