Is renting the new buying or is there more to it?

Is renting the new buying or is there more to it?

Is renting the new buying or is there more to it? The rent ratio shows you which makes more financial sense when comparing purchase prices and rent payable. But is it that clear cut?

This Irish Times article gives clear examples of when it makes financial sense to rent and when to buy but it is much more than. Renting has many advantages over buying such as ability to live in a property or location that you cannot afford to buy in.  You can move easily when your circumstances change such as changing jobs, having kids or you just don’t like the neighbours.  This one can be a big problem if you have bought a house and you live beside the neighbours from hell.

If you are moving into a new area or country, even if you want to buy, it makes sense to rent for a period of time.  With mortgages so difficult to get at the moment, renting is so much easier to do.  Renting for a number of years will also help you to show that you can afford to pay a mortgage and that you are a reliable payer.  Overall renting is very flexible and suits many people at different stages of their lives and is any easy choice during those stages. 

Buying has some advantages over renting and in many cases, depending on the stage you are in your life, these advantages can carry more weight.  As a nation of mainly home owners, most of look to our parents and our childhood, which gives many of a wish to own our home.  This becomes stronger when we are ready to settle down and have kids.

Another very strong driver is that if we pay each month off a mortgage, assuming we don’t make the mistakes of the Celtic tiger by topping up our mortgage, over time, inflation will reduce the monthly payments and we will have an asset at the end of the mortgage. Renting or buying is not a straight forward financial decision and the answer is different for everyone.