Owner or Tenant: Which Is Better?


– Advantages and disadvantages of owning

– Advantages and disadvantages of renting

“Do I have the right to hang this picture on the wall…? You are the owner! The question no longer arises: let your artistic soul express itself.

Being a master of your property is a great opportunity. However, there are also points of responsibility to manage. Thus, some of you will prefer to remain tenants for fewer constraints and more freedom. Owner or tenant, this article helps and advises you. Let us guide you.

Advantages and disadvantages of ownership

Benefits: an investment, a heritage, a security

Becoming a homeowner is a memorable experience for most of you. Indeed, this status confers many advantages which you benefit from daily:

– you no longer pay rent to your landlord each month and, as soon as your loan is over, you no longer have to pay monthly payments to your bank;

– your monthly payments remain constant throughout your loan if you choose a fixed-rate loan, while your rent is indexed during this same period;

– you can adapt your monthly payments to the evolution of your income and, in the event of an increase in your income, reduce the remaining term of the loan by the same amount;

– you build up an estate that you can control completely (work, resale, etc.);

– you ensure a serene retirement;

– you benefit from the current aids for homeownership;

– you benefit from changes and developments in your neighbourhood, which may increase the value of your property.

As long as real estate prices are rising and credit rates remain low, it is in your best interest to become a homeowner.

Disadvantages: new expenses

Being a homeowner is not without constraints either. Your new status generates obligations:

– taxes such as property tax, but also other charges such as renovation work, maintenance, etc. ;

– the monthly repayment of a possible real estate loan, which requires sufficient borrowing capacity (generally one-third of your resources);

– the risks when reselling the property (not finding a buyer, selling at a loss);

– the payment of transfer duties and notary fees at the time of your acquisition represents a significant sum to be paid in addition to the price of the property and any agency fees;

– the recourse to a loan most often requires the setting up of a guarantee (guarantee, mortgage) generating additional costs and implying that you obtain the corresponding release to resell your property if you have not finished paying it back by the day of its resale;

– the length of time you hold your property must be sufficient to amortize your acquisition; it is, therefore, advisable to think carefully before committing yourself to possible changes in your situation (risk of transfer, desire to expand your household requiring a larger home, etc.).

Please note: as a landlord, you must also deal with the hazards that surround you, such as neighbourhood problems, construction of windmills, construction of railroads, etc.

Advantages and disadvantages of renting

Advantages: a great freedom

As a tenant, you have fewer constraints and almost complete freedom of action. There are many advantages to being a tenant:

– your freedom of mobility is absolute; you can leave the apartment whenever you want, only the notice period has to be respected;

– you do not have to pay for major repairs;

– in the short and medium-term, the amount of rent is lower than the cost of an apartment;

– if you have not taken out a mortgage, you can take out another one (vehicle, company creation, etc.);

– in certain areas, you are better housed for a rent equivalent to the amount of your monthly payment; due to the increase in real estate prices, the rates for selling have risen sharply but have remained stable for renting due to a rent control system; you, therefore, have the possibility, for an equivalent amount, of renting a larger apartment than if you had bought it. However, exemptions to the rent control system are possible in the case of obviously undervalued rents or the possibility of improvement or compliance work.

Disadvantages: lost funds

In the long term, renting is not profitable:

– you support the increase in the price of the rents, which is calculated compared to the index of the cost of construction or the index of reference of the rents;

– after years of renting, you will have paid in rent the price of your accommodation;

– you cannot carry out any work in your apartment unless the owner agrees;

– in certain regions, the rental offer is limited: you will have a lot of difficulties finding a large apartment or a house;

– your landlord is free to repossess their property at the end of your lease (leave to repossess), which means that you will have to change your place of residence and incur moving costs;

– your landlord is free to sell his property during your lease; the rents you have paid up to that point do not constitute any assistance in acquiring the property; your financing plan must therefore allow you to pay the total price of the property in addition to the non-refundable rent payments.

Whether it is better to own or rent depends on you, your situation and the evolution you can foresee in your life. The advantages of ownership will be material: ease and security, especially at the end of the loan. The benefits of renting will be financial: you will save money for a certain period and take advantage of this to invest your savings!

Read more:

2022 First Time Home Buyers Incentive: Pros and Cons

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