Owning a Home or Living on Rent

While, there is pride in being an owner, the economic logic sometimes defies emotional bias, making renting a house a more favourable option. Realty+ asks industry experts, how one decides whether to stay on rent or buy a house. Text: Sreyasi Maity & Leandra MonterioAbhinav Joshi, Head of Research, CBRE India feels renting and buying a home have their own set of advantages, suited for different requirements. Renting a home is suitable for young professionals who prefer staying closer to their workplaces. Owning property assumes significance for older age- group who prefer to have the stability and security of their own home. Anshul Jain, Country Head & Managing Director India, Cushman & Wakefield finds the question very individual and need specific. "“Depending on one’s budget and EMI paying ability one should take this decision. In most of the larger cities, monthly rent payments are lower than the corresponding EMIs and hence renting looking the better option. However, the current scenario where residential prices have undergone a real correction, it is one of the better times to buy a property, if one intends staying in the same city.” Girish Shah, Executive Director, and Residential Services at Knight Frank India suggests considering the usage of the residential property. "“If it is for investment, one should tread carefully with tempered expectations. One also need to be clear weather the investment is for yield or for capital generation, as both have been weak in the recent past.” Anshul Jain, Country Head & Managing Director India, Cushman & Wakefield finds the question very individual and need specific. “Depending on one’s budget and EMI paying ability one should take this decision. In most of the larger cities, monthly rent payments are lower than the corresponding EMIs and hence renting looking the better option. However, the current scenario where residential prices have undergone a real correction, it is one of the better times to buy a property, if one intends staying in the same city.” According to Samantak Das, Chief Economist and Head of Research & REIS, JLL India, “If someone has the option to buy or rent, nothing to do with mobility and income, then I think this is a great time to buy property irrespective for city. As we all are aware, the residential real estate sector has been reeling under pressure for the last 3-5 years, in terms of price hike, sales. In this regard, anyone buying a house today would get a fantastic negotiated deal.” With the start of a new financial year, we believe it’s time to review the renting vs buying debate. Home ownership creates an asset for the family, home loans are getting cheaper, offers tax benefit and affordable housing is getting a boost. Renting a home offers flexibility to city hopping professional, saves on property & maintenance tax, heavy EMIs that are more than monthly rents and option of investing in tax-free, high return equity diversified fund for the same period as home loan. Prashant Bindal, Chief Sales Officer, Lodha Group calls it a decision dependant on one’s life-stage requirement. “Considering a plethora of options available for home buyers in the residential segment that suits any budget in metro cities, coupled with easy availability of home loans and government incentives and subsidies for homes in the affordable category, buying a home is always a strongly recommended option.” Gaurav Sawhney – President, Sales and Marketing, India, Piramal Realty “Currently, major developing suburbs in Mumbai are witnessing projects that not only suit the budget of end consumers but are well connected in terms of both social and physical infrastructures. These locations offer superior infrastructure, good connectivity, access to healthcare facilities, educational institutes and entertainment facilities which positions them as ideal destinations for residential housing. With improving connectivity between the business districts and peripheral areas, substantially reducing the transit times, there is a huge potential for these markets like Thane, Kalyan-Dombivali belt making them the new real estate destinations within the city.” Aditya Kedia – Managing Director, Transcon Developers feels buying just because realty values have dropped down or to rent a residential unit is not right. “It is important for buyers to note other factors like affordability, flexibility, long-standing commitment, comfort and convenience, tax advantages, financial stability and EMI’s and low home loan rates. Also, looking at the current market scenario, it would not be advisable to buy a property for investment, using a home loan which will take years to repay. Buying is preferable if you have seventy to eight per cent money for down payment or the rent is more than or equal to your EMI.” As per Om Ahuja, COO, K Raheja Corp, “Buying property has always been a big deal for Indians despite the market scenario. Hence the older generation is always in favour of buying. Renting is for young generation that frequently travels for work or education.” Danish Farook, Director & Managing Partner, Silverline Realty (P) Ltd., DF Silverline Constructions LLP recommends renting only for a short term. “Buying or renting is a factor dependent on one’s affordability irrespective of the market scenario. Buying today will always be cheaper than buying tomorrow. This is the best time for fence sitters to buy a home as markets will only rise going forward.” Real Estate has always been one of the most attractive asset classes in the country but, according to Anshul Jain, Indian residential market is no longer a viable option for short-term speculators. “Value creation is largely happening over a longer investment horizon. As an investment option the residential asset class has lost some sheen in recent times.” However, Girish Shah citing the Wealth Report 2019 analysis said, “India UHNWIs allocate close to 23% of their investment to real estate. This trend is even more pronounced with the SEC A & B category buyers, who may be investing over 50% of their annual investment in real estate.”Abhinav Joshi expressed that, currently, there is too much reliance on the house ownership at the expense of other models of realty. “Owning a home is considered a source of social and financial security in India.” Danish Farook added, “In India, you don’t have the concept of social security. The penetration of insurance is very low. The stock markets are volatile, risky and intangible. A property investment is secure and tangible and at the same time high-yielding. Properties in urban areas from residential, land and low entry commercial, retail will always be in demand and therefore will always yield good returns and capital appreciation making it a favourite investment and asset class.” “Overall buying is always a better option than renting owing to asset creation for residential purpose. There are various reasons like it helps save/invest, tax saving, asset creation from a commercial viewpoint. For married couples and families with kids, there are deep emotional reasons as well for buying a home. Creation of a group of friends for both kids and adults helps social bonds. Most of the markets as well are currently end-user driven owing to market scenario.” shares a Kalpataru Spokesperson. Prashant Bindal agreed that other investment tools are highly sensitive in nature and fail to provide safety and assured short term returns in the form of rent and long term returns in the form of appreciated value as real estate does. Moreover, the availability of easy home loans and wider expanse of properties to choose from as per budget makes real estate, a lucrative investment medium.