“Rent or own?” It’s a perennial question. Both make sense and have their appeal, especially with regard to a self-determined life. If you look a little more closely at their respective advantages and disadvantages, one of the two options offers some compelling pluses.
Top five advantages of renting
- Greater mobility: you can change locations quickly, since finding a new tenant is normally no problem. This means being better able to seize an opportunity, such as a new job, or to simply escape irritating neighbours.
- Speedy adaptation to changed circumstances: a divorce is the worst-case scenario for many home-owners, since selling up can take time. But other changes too, such as a job in another city, a lower salary or encroaching old age, are not easy for home-owners to master.
- Renovations & maintenance: these are paid for by the owner, so you have no expenses on that front.
- Economic and financial developments: interest rate trends, price hikes or real estate bubbles? These issues affect tenants as well, but to a much lesser degree than they do proprietors.
- Flexible savings opportunities: disposable financial resources? They can be placed in potentially lucrative and more flexible investments (such as equities, bonds or funds).
Top five advantages of owning
- Security: no tenant cancelling the lease on you.
- Low interest rates: buying an apartment is often considerably better value than renting it. This notion is one of the main reasons for the increase in home ownership in Switzerland since 1970, from 31 to 40 percent.
- Retirement provision: seniors who live in a paid-off property need not fear rental increases, and thus have one worry fewer.
- Appreciation in value: real estate is a solid investment that also offers the possibility of appreciation in value – provided the location is right.
- Planning life in self-determination: the personal liberty to shape your life in line with your own ideas. Whether that involves a pet to make your life fuller, red walls in your living room or simply the ability to host people in your own home.
Buyers are happier – and better citizens
There is another factor that speaks for owning property: home-owners are happier people. That is at any rate the core message of a survey carried out by the Swiss Federal Statistical Office (FSO 2016). A study performed by Germany’s University of Hohenheim (2017) comes to the same conclusion: owning one’s home or apartment has positive effects on social cohesion. Property owners, for example, buy more regional produce, have more friends locally, are often more involved in neighbourhood goings-on and are also more willing to make donations.
A good feeling is important – as is good planning
Although the case for a life as property owner depends mainly on “soft” factors, the “hard facts” need careful and dependable analysis as well to ensure that the decision bears fruit.
- Start planning early
- Estimate requirements realistically and think of alternatives as well
- Make calculations, including at least 20% equity
- Establish a savings plan to accumulate equity
- Select a mortgage and examine affordability in detail
- Do not underestimate ongoing costs, since they affect affordability
Make an appointment for a consultation
The complexity of the last two points alone means it is a good idea to seek advice tailored to your individual situation and wishes as a would-be property owner.
Sources: FSO, study of residential housing 2018, study by the University of Hohenheim (2017)