Table of Contents
While most Indians aspire to own a house, the present state of the economy, high real estate prices and uncertainty following the demonetisation drive, have forced people to adopt a wait-and-watch approach. In this scenario, it may be smarter to rent a house, rather than opting for an outright purchase.
High property costs
Rising property prices have busted the dream of buying a first house, for many Indians, agrees Geetanjali Anand, director of Andy Home. The need to make a down payment and other upfront costs, which may be up to 30%-35% of the property’s value, also act as deterrents for many, says Anand.
“During the last few years, owing to unfavourable economic conditions, income has failed to keep pace with inflation, thereby, making lives difficult for those servicing home loan EMIs. Hence, staying on rent could actually be the wise thing to do, in the current real estate market. Even when property prices in India rose, rentals remained stable, making renting a highly preferred option. The mindset and perception of people have also changed over the years and living on rent is no longer looked down upon. Moreover, if one is not sure about how long one will the stay in a city, it is best to live on rent,” elaborates Anand.
Ability to choose a property as per one’s preference
The benefit like living close to the office, can overrule many disadvantages of renting a home. Other people may seek to live in a posh location, given the favorable rental costs, as compared to buying a home in the same location. Rental is also a better option for newcomers to cities. For example, one can live as a paying guest in Delhi or Mumbai.
Greater security in lease agreements
Legal aspects have also been responsible for driving this change, in favour of rentals. Landlords need not worry as much, about tenants living in your house and refusing to vacate. House rental rules in India now involve measured steps such as registered lease agreements, mandatory police verification, proof that the annual rental has been actually paid, etc.
“Renting a house these days has become much more discreet than buying a home. For many, renting is the short-term solution for their housing needs, while they save up for a down payment. Many people also opt to rent, even when they have the resources to make the down payment for a purchase. If there is uncertainty of staying in a city, then, renting is a far better option than buying a house, which typically ties one down to a place, making him less open to relocation,” points out Dr Prodipta Sen, expert – retail and real estate, MRICS (UK).
Over the years, there has been a perceptional change, with people from all walks of life opting to rent houses. Landlords have the choice to be subjective, about whom they rent the house out to, and tenants too can screen their prospective landlords, before finalising a house. Awareness about tenancy rights and house rental rules in India, have also increased and as a result, there is greater participation from both parties, which only augurs well for the future of this market.