Like many cultures in the world, Singaporeans strongly believe that everyone should own a house.
Renting a house is unheard of unless you are a foreigner working or studying here.
So as funny as it is, if you tell someone that you are renting a house, the first question you get will be, “Are you a Singaporean?”
Working as a real estate agent, I see a trend forming since pre-covid days – an increasing number of the young generation are renting a home.
This group of millennials and young Singaporeans seek a space of their own, yet owning a home is too expensive. The struggle is real, especially with the high-interest rates and rising costs of resale homes.
Some of the types of people who turn to rent a home include:
- Those who have bought a new development, awaiting it to reach the temporary occupation permit (TOP)
- Homeowners who are awaiting the keys to their BTO
- Leaving their nest in search of privacy, freedom, and independence
- Expats who are living here for some time
- Those who prefer not to come up with a large sum of deposit to buy a home
Regardless you are renting or questioning the reason to rent, here are 10 good reasons renting might be a better solution than buying a house.
Move into a fully furnished house
Buying a house comes with numerous head cracking issues. One of them happens to be renovation works.
Some homes have hidden problems behind walls that cannot be seen on the surface. Some older home comes with leakages or moulds issue. And then there are unwelcome guests, such as termites.
All these problems take time and money to resolve. It can be stressful too. Besides this, you will need to invest in furniture and white goods. Being a tenant saves you from these unnecessary complications since they will not be yours to solve.
Flexibility with fewer obligations
Nowadays, travelling around the world is on the bucket lists of most people.
Many are also considering working and living overseas for long periods.
If you consider yourself an adventurous person, sailing across the seas to neverland, then renting a house will make more sense.
No need for huge upfront payments
Upfront amount when Renting a house
- A security deposit
- The first month’s rental
- A commission fee should you work with a property agent
- Stamp duty
Purchasing a home involves heftier upfront costs
- 5% downpayment in cash,
- A further 20% downpayment in cash or using your CPF
- Buyer Stamp Duty
- Additional buyer stamp duty if you are a PR / foreigner / buying your second or more property.
- A commission fee should you work with a property agent
- Legal fees
Now do you know why many are turning to places for rent?
Few maintenance obligations
Most of us lead such busy lives that we barely even have time to take a break, much less maintain a home.
Depending on your rental contract, there are certain things that you are not accounted for. Property tax and maintenance fees are some examples.
Not to mention, these maintenance costs can accumulate and put a huge strain on your wallet.
Lesser financial commitments
Buying a home involves a great deal of financial commitment.
Besides the cost of the initial payments, homeowners also have to fork out money for renovations and other miscellaneous maintenance costs that can set you back by thousands at a go.
Many end up paying a mortgage for all their working lives. Compared to a rental deposit of a few months of rent, renters have more cash to invest in other aspects of their lives.
On top of this, you’re going to require some money on hand for emergency household expenses. If you prefer to have more cash on hand, renting a place that is fully furnished and move-in ready is an option.
Remove the worry of home depreciation
It is very tempting to look at real estate as an investment, especially in good times.
Having your own home usually means you can rely on your property as an asset to weather you through external circumstances like inflation.
However, due to unexpected global crises and property market trends, your home might not be valued as much as you wish it would.
Instead of having to worry about whether a home will be a worthy financial investment, it might be more cost and time-efficient to look to other forms of investment instead.
Flexibility to downsize
Renting a house gives you the option to relocate to more affordable living spaces at the end of the lease.
This kind of flexibility is important for people who want a less costly, smaller alternative that best matches that budget.
It is harder for homeowners to downgrade, especially if they have invested a significant amount of money in renovations, and the selling price might not be able to cover the costs.
Fixed rent amount
The amount you pay for rent is fixed in the lease agreement.
While landlords can raise the rental prices for the new lease term, you will have a period of notice, during which you can decide to stay or shift.
On the other hand, homeowners deal with increasing property taxes and other unforeseeable costs, such as rising interest rates. These are factors that you cannot get out of unless you sell your place to pay the loan.
There’s no pressure to upgrade
It’s a lot easier to be content with a less-than-satisfactory home design, simply because you’re renting out a space.
Since homeowners are in it for the long haul, home upgrades are usually expected if they want to make a good return when they are going to sell the property.
As a renter, this is a problem that you will not have to worry about.
Start adulting earlier
In Singapore, if you are below the age of 35 but still want a place to call your own, renting is probably the most viable option.
Purchasing private property is out of reach for many. Another option will be to buy a flat together with your parents. However, this might affect your chances of using future housing grants for your next flat when you decide to buy with your spouse.
Renting a house allows this group of millennials to live independently and accumulate their wealth before committing to a home.
Renting vs. buying a house
Ultimately, the decision of renting a house boil down to your lifestyle choices.
Do you need a place that is near your school or workplace? Are you one who prefers to have your own space without being tied down?
If you have any questions regarding renting a house or you are a landlord looking to rent out your house, feel free to drop me an email and we can discuss this further!
