To rent or to own?

One of the toughest decisions to make in life is relating to property especially if it’s to buy or to rent the house. You see a house that you will really enjoy staying like the Pacific Place in Ara Damansara but you don’t know if you should buy or rent the house. Soon, people around you start giving their own ‘personal advice’ on this. Many will advise you to buy the house instead of renting but you couldn’t convince your other half to fork out money for buying the house, it’s a huge commitment. On the other hand, renting doesn’t seem to worth it because the amount could actually get you the house of your dreams. Now, let’s make some comparison of buying or renting.

There is the time factor for you to decide whether to buy or rent, for example, the time span that you will be staying in the house.  Buying may not be ideal if you’re planning to stay the house for few years, there are few factors you will need to deal with.

  • For every house transaction is transacted, there will be costs incurred in the form of legal and stamp duties which may easily attainable at five figures.
  • Real property gain tax (RPGT) is applicable if you have the intention to sell your house in less than five (5) years. According to July 2013, RPGT is 30% of net gain for the first three years and between 0-20% for next three years.
  • Over the last few years, you have maintained and serviced the house to maintain the condition.
  • Don’t forget the renovations you paid before moving in.

All this substantial amount you have paid has been depreciate over the years although it should be added into the value of the property. Perhaps if you want to keep the house and collect rental to cover your monthly instalment. However, if you are unable to manage the house rent or only able to rent out at 50% of your monthly instalment, you are required to service the rest of your loan commitment from your own pocket. This could actually be your financial burden and affect your chances of buying another property.

Experts have recommended that you will need to stay long enough in your home for the value to appreciate that can cover your transactional costs, it could up to five years or more. If you are lucky enough, it could be shorter time span during the property boom phase. Unless, if you are not sure of living long-term lifestyle and not financially strong enough to service your monthly repayment, do look into renting options.

While some are excited to making change in their life and like the idea of moving to a new environment, some may not be a matter of personal preference but a matter of being able to mobile around for their job like expats. In this case, it is highly recommended that renting would best fit under this situation instead of buying. There are some at the exact opposite who prefers a stable lifestyle, enjoying a structured lifestyle or prefer with specific location that they will never leave again, in the short period – buying the property makes more sense for this demographic group.

Some people enjoy the freedom of changing their house décor or fengshui once in a while, paint the walls according to the trendy colours or framing up photos on the wall – buying the house would be easier for them. How about the freedom of moving around? These living nomads enjoy shifting around to either try out neighbourhood or experiencing new places, this type of freedom is better to rent a house. Once the agreement expires, they are free to roam around to look for new place.

Property investors may be deferred that even you’re not going stay in the house; the property is going to appreciate over time and earn you rental over time that makes sense when it comes to buying a property. Some may prefer to own commercial properties as it appreciates faster or higher than residential. However, it all boils down to the investor’s preference and style of investment because if maintaining a house is what you do best, you might as well focus on it.

In conclusion, it is based on one’s preference and lifestyle or current situation to own or rent the property. Do take time and weigh all the factors or influences that will give your sound decision whether to own or rent a house.  


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