subject: ED BiD PROPERTIES : Penang Property To rent or To Buy? [print this page] Many consider property, whether a home or house on land or a stratified condominium unit, as a big ticket item which involves high capital and long term commitment. So the question arises as to whether it is better to buy or rent. The answer depends very much on your financial affordability and needs.
EdBiDproperties.com looks into the advantages of owning a home versus renting one.
Advantages of home ownership
Advantages include assurance that the property is yours for good and this creates stability for your family and peace of mind. There is also a higher security factor and pride in home ownership.
Owning your own property also enables you freedom of choice of occupation and usage, so you can rent out as you please and decorate as you like.
Instead of paying a monthly rental, you make repayments to the banks (unless you purchased outright in full) and thus gradually build up your home equity and eventually own the property in full. Thus your money goes on something you own.
House or home ownership also brings the advantage of hedging against inflation. For example, owning a house in Penang becomes more expensive over the years as the island is a sought after location and land size is not increasing. Rentals thus would also increase over time, this is another clear advantage of ownership.
Investing in a house, particularly in a strategic location such as Penang may lead to higher landed property value than you paid intially.
A further advantage is tax relief. Malaysians are eligible for tax relief of up to RM10,000.00 a year on loan interest payments to finance the purchase of property for three consecutive years subject to conditions that it is limited to one residential home for own occupation (not for rental) and that the sale and purchase agreement is signed between March 10 2009 and December 31 2010.
Besides, the government has further relaxed the EPF housing withdrawal guidelines beginning of January 2010 to encourage more Malaysians to invest in buying property.
Yet, not only Malaysians are keen to buy homes here. With Penang's reputation as one of the best locations world wide and having been awarded World Heritate Site status by the UN, as well as it's great food, standard of living and infrastructure, as well as nature and sea, a great many foreigners are choosing to move here, usually under the MM2H program.
With those being key advantages of owning your property, we now look at the advantages of renting.
Advantages of renting
Renting is a cheaper, and thus more affordable way to live in a home with less upfront costs. Deposit payments are however needed, at least up to 3 months of which the security and utility deposits are refundable.
Other costs associated with purchase are saved, as there is no need to bear documentation costs such as legal fees, stamping charges, taxes assessment rates and quit rent.
Time is also saved as the process of rental is faster compared to property purchases which may take 3-4 months to complete the deal and for the property to be handed over.
The option of choosing your length of stay according to your need and depending on monthly or yearly tenancy, if you aren't seeking permanent residence in a particular area or state.
Maintenance charges are not a liability (to a certain extent depending on the rental agreement terms) to tenants as the landlord is held responsible to these matters.
Flexibility of relocating your residence without the worries of leaving your house empty, as you do not own it, is another advantage of renting.
Conclusion
Choosing to rent or to buy depends on many factors, firstly, fast rising prices and length of staying.
Whilst no one can accurately predict the future pricing or rental trend of the houses in a particular area, however, analysis to find out average house price index or its trends based on the past historical housing data of say the past 10 years or 15 years or 20 years of a similar class of property in a specific housing area can be quantified.
Still the main factor of prices rising (whether for the land or housing materials) are indeed true. Rental can be a good strategy to save up money in reference to buying a house on your own (by escaping too much debts of bank loans) however, buying holds privilege as owner's assets are assured and you have more freedom in reinvestment.
