You want to move, but still doubt whether you want to buy or rent? Before making your decision, it’s important to put the various elements/factors/variables into perspective. Income, either sole or combined with a partner, children, future plans: these starting points all affect your choice when you compare renting or buying a property. If you want to refurbish your future house to your own specifications, it will probably be smartest to buy. If you do not want to be responsible for maintenaning a property or are not sure if you want to live for a longer period of time at a given location, the choice of a rental property might be the best. By looking carefully at your needs, you will quickly discover what suits you best. So let’s have a closer look:
Pros and cons of renting a house or apartment
Disadvantages of a rental property
- making changes to the house won’t be easy; you’ll need the landlords permission
- you won’t build on your personal capital with any increase in property value
- yearly rental increase
- usually more expensive, per month than a privately owned property
- limited choice of housing stoch to choose from
Advantages of a rental property
- you will have some tenant’s protection, which means that your landlord cannot just terminate a lease at will
- a rental contract can be terminated by yourself on relatively short notice
- the landlord will be responsible for maintenance of the house
Pros and cons of buying a house or apartment
Disadvantages of a privately owned property
- you will be responsible for maintenance of the house
- you will bear the costs for additional insurances, real estate and communal taxes
- your expenses might vary when the interest rates do, unless you fix your interest rate
- when moving you might need time to sell the property, unless you would prefer that above renting out?
- house prices could decrease as well as increase, which would effect your personal capital
Advantages of a privately owned property
- making changes to the house will be easy; you won’t need the landlords permission
- the interest payments on the mortgage can be tax-deductible from your income, so you’ll receive a substantial part of it back from the tax authorities
- as long as the interest rates stay stable or are fixed for a long term your expenses will be too
- you will build on your personal capital because the house is fully yours when you have paid off your mortgage
- you’ll have a wider choice of locations and houses to live in
- when house prices are going up, the growth of your personal capital will increase
- when moving you’ll have the option to increase your income by renting out your property long term
Example
Difference in costs when either buying or renting a property (apartment) in Amsterdam
A 65m2 rental apartment in a popular Amsterdam area will cost around € 1,750, – per month.
In the same area, with the same number of square meters apartments are available for sale on Dutch property search site Funda for € 375,000, -.
With a mortgage rate that lasts 10 years at 2.5% you pay for an annuity mortgage € 1,395, – per month. Compared to renting, that’s over € 250, – per month less while you also pay off a further amount of your mortgage every month.