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The Disadvantages of Renting

The Disadvantages of Renting

Even if you are financially in the position to purchase a home, you may be reluctant to jump from tenant to property owner. Before making that decision, weigh the pros and cons of renting versus owning. The disadvantages of renting include financial considerations as well as limits to personal freedoms.

Tax Deductions

    When using a loan to purchase a home, the interest you pay is deductible on your income tax, and property tax is typically deducible. Even if your monthly interest, principle and property tax payment exceeds the rent you would pay on a comparable property, the tax savings at the end of the year might mean more money in your pocket.

Freedom of Enjoyment

    While property owners must abide by zoning regulations and rules of any homeowners' associations, renters experience more limits in regards to how they can use the property. When renting, the property owner dictates what type of pet (if any) the renter can bring onto the property, how the tenant can decorate and can even limit a renter's overnight guests. The property owner has the right to check the property periodically, which interferes with the tenant's privacy. When adding a garden, painting a room or hanging pictures on the wall, the renter typically must have the property owner's permission.

Ownership

    Even if a tenant pays rent for 30 years at the same location, at the end of 30 years he owns nothing. For the homebuyer who continues to make his house payments and pay his property tax, at the end of the loan term he owns the property, and no longer has a house payment. While the homeowner does not have a house payment, he is still responsible for paying property tax, repairs and insurance on the property.

Lease Agreement

    While the renter has the ability to budget for the short term, by knowing what her monthly rent payment is, and she is not typically liable for any unexpected repairs on the property, there is no guarantee her rent won't increase at the end of the lease term. If the renter has to move at the end of the lease term, this means additional expenses for moving fees and other expenses associated with renting, such as security deposits. If property values increase in the area, the renter can expect to pay higher rent for a comparable property, while a property owner who has a fixed interest mortgage continues to pay the same amount each month, while building equity.


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