Unsure if you should rent or buy a home? You’re not alone, it's a common dilemma amongst many Singaporeans.
For many Singaporeans, we've been ingrained to think that buying a home is the ultimate arbiter of success as a grown-up. You might feel that ‘you’ve made it’ in life once you've settled down and gotten hold of your dream home.
But the truth is, buying a home might not be the best option for every individual. Buying a home in Singapore, can entail a great deal of paperwork and major financial commitments that go into paying off your mortgage, property taxes, renovations and maintenance. It's not everyone's cup of tea. So if you're considering your next move, here are 5 reasons why renting isn’t necessarily bad and could be a better decision than buying a home.
1. Renting Provides For Better Cash Flow
Buying a home involves a great deal of financial commitment. The cost of down payment can easily cost you S$50,000 or more depending on your chosen property type. Lest we forget renovations, furniture and electronics that will set you back by thousands of dollars in a short period of time — and these are just initial payments.
In comparison to a rental deposit of one to two months' rent, this leaves you with more cash on hand to invest in other aspects of your life. For example, funding your business idea, starting an investment account, heading back to school, the possibilities are endless.
To top it all off, you have to set aside a sum of cash for emergency household expenses. For those who prefer to have more cash on hand, renting a place that's fully-furnished and move-in ready is definitely an option.
2. Renting Can Be Less Financially Straining Than Owning
On-going costs like property taxes, monthly mortgage, and home maintenance can be more manageable once the initial payments (downpayment, renovation and furnishing) are out of the way. However, it is important to remember that you have to bear this cost for the next 20 to 30 years (depending on your mortgage duration).
That's cash you have to set aside even if you choose to rent out your space for passive income. You should also take into account the possibility that depending on the economic climate, refinancing your loan amount every few years may cause you to fork out more than what you had previously budgeted.
Renting is financially freeing because you only pay for a fixed rent, utilities, and in some cases Wi-Fi, for the length of your lease. Knowing that these costs are the only ones you really have to bother with, is less straining (and stressful) in itself.
3. Renting Offers You More Flexibility On Location
During the selection process itself, your location is restricted based on what you can afford to buy. Some of these areas might be located further from your workplace, your family, religious community, and even preferred entertainment spots. To add, once you buy a home you're locked in for at least three or five years depending on your property type. Yes, there’s always the option to sell and move back with your parents or upgrade to your dream location, but this process is tedious and not to mention, costly.
However, if you decide to rent, you can move freely and live in the different neighbourhoods in Singapore from Tiong Bahru to Joo Chiat, or wherever that suits your lifestyle and monthly budget. Additionally, if migrating is on the table or you plan to move from cities once every few years, renting would buy you the freedom to move wherever life takes you.
4. Renting Makes It Easier To Move Away From Toxic Neighbours
This may not be something that comes to mind when you think about renting or buying a home, but something significant enough to affect your quality of life over time.
We’re sure that you’ve probably heard of many horror stories involving nasty neighbours and the lengths they would go to inconvenience others. Should you buy a house and are ‘lucky’ enough to meet such neighbours, you would not be able to move out as easily as you would like to.
Renting gives you more flexibility to move away from the toxic environment and to a place that gives you a peace of mind. To avoid these unnecessary awkward encounters, at Hmlet we have a dedicated Member Experience team that you can reach out to if you find that your flatmate isn't a good match.
5. Renting Removes The Worry Of Home Depreciation
It's sometimes tempting to hop onto the bandwagon and buy real estate as an investment, especially in good times. Having your own home has its perks as you can rely on it as an asset to weather you through external circumstances like inflation.
In the aftermath of the 2008 financial crisis and the current global economic situation due to COVID-19, your home might not be valued as much as you wish it would. It could be the case that your home value might even be less than your existing financial obligations due to inflation. Perhaps not having to worry about this will make space for you to spend your time and energy looking at other forms of investments.
Buying a house might provide you with that sense of home ownership, but despite the huge financial spends, you only own it for up to 99 years (unless it's freehold) whether you buy a private property or a home from the Housing Development Board (HDB).
If you crave more financial freedom and flexibility to pursue your family, personal or career goals, renting a home can allow you to obtain your desired lifestyle. Renting doesn't tie you down to a particular property for the long haul, and you have the freedom and flexibility to move and live in your desired location with the perks of modern-day accessible living.
If you're a:
- Singleton seeking independence, growth and personal space (especially with most of us still working from home),
- Travelling professionals with work commitments that require you to travel often,
- Couple ready to take your relationship to the next level,
- Short-term lease seeker (e.g. waiting for your Built To Order (BTO) HDB flat to be completed),
- Person looking to move to a fully furnished and functioning home as soon as possible,
- Nomad who wants to march to the beat of their own drum, then renting would be a great solution.
Of course, this doesn’t imply that buying a home is dated or bad, the point is, to pick the option that best suits your lifestyle and budget.
So, if a fully-furnished home or room in a co-living space, flexible lease and forming meaningful connections sounds like your next dream home, then stay with Hmlet today!