Yahoo Finance Pros And Cons Of Buying Or Renting Landed Property
Not every home is created equal. When it comes to the question of renting landed property versus buying, those differences can raise some interesting questions to consider!
So in order to help clarify those choices, here’s a quick look at the pros and cons of buying versus renting landed property.
Buying Landed Property - The Pros And Cons
Landed property comes in all shapes and sizes, from the emerging trend of cluster house living to the iconic luxury bungalows that line the avenues of affluent neighbourhoods.
Now, this type of home comes with some unique considerations when it comes to buying.
The Pros
1) Investment Value
It’s too simple to say that landed property is always a good investment, but buying a property in the right area can certainly offer some sizeable returns for a savvy investor.
The bonus of land around your property does provide a significant benefit for owners of this property type, making them generally less vulnerable to price depreciation.
Land is a limited resource, and if you’ve got your own parcel of it in a desirable neighbourhood, chances are you’ve got a good investment on your hands.
2) Freedom To Design
As an owner of landed property you have the freedom to design a space that suits your lifestyle. Why not knock through the kitchen for some open-plan living?
Add an en-suite bathroom for some convenient style? Break down that oddly placed bedroom to make a giant family area to enjoy?
The flexibility of landed properties is a big bonus for buyers with the vision to adapt their home. It can also provide an important route to increasing the value of your property.
3) A Space To Call Your Own
Buying landed property provides a unique opportunity to develop an outdoor space that works for you.
You can plant trees to add a little welcome shade, upgrade the driveway to make a smoother ride for your car, you could even add a swimming pool if you wanted!
Buying a landed property doesn’t just mean a house of your own, it means a little piece of outdoor space is exclusively yours too.
The Cons
1) Cost
Landed property is undeniably more expensive. While the price per square foot might be less than a condominium in a desirable neighbourhood, the sheer size of landed homes often means the total cost is significantly higher.
If you want a landed home, you need to recognise the significant financial costs of buying one. That also means potentially considerable costs paying back a home loan.
2) Financial Risk
A substantial cost comes with a substantial financial risk.
While landed property has generally performed better when it comes to long-term valuations in Malaysia, there’s no guarantee that your particular property will enjoy the same benefits.
You can’t assume that the value of your property will automatically grow.
3) Maintenance
The ability to sculpt your own outdoor space also comes with its drawbacks.
If you want a beautifully maintained garden, you need to take the time yourself, or more likely spend the money for someone professionally-trained, to ensure it stays that way.
The bigger the landed space, the more costly that proposition becomes.
4) Repair Costs
Many landed properties may sit right next to each other, or form part of a limited development such as a cluster home.
However, that doesn't mean any serious repair work to the elements (like the roof or dividing wall) will be a shared cost.
It's a financial burden which falls on your shoulders alone!
The costs associated with these repairs can be significant, and unlike high-rise living, you’re not sharing that cost between a large number of other residents.
Renting Landed Property - The Pros And Cons
Landed property is highly desirable, and if you can’t afford the price to buy, it could well be that renting is the way forward for you. Here are some pros and cons to consider.
The Pros
1) Affordability
Renting landed property can be an affordable way to find a great place to live.
Not everyone has the savings or the income to afford buying a luxury bungalow in Bangsar, but with the option to rent, you can find yourself a beautiful place to call home without the need to shell out millions of Ringgit upfront.
That means a large house for rent makes for an attractive proposition for many.
2) Reduced Financial Risk
If you’re just renting a property, you’re not putting your own capital at risk of price fluctuations.
This gives you the option of having a great place to call your own, without worrying about the property price trends in the neighbourhood.
3) Maintenance
If you’re renting a landed property, chances are you’re not responsible for the maintenance and upkeep of the grounds.
That means you can enjoy the pleasure of outdoor spaces at home without the stress of being the one to keep them looking good.
The Cons
1) Repairs
High-rise properties often come with comprehensive building management or on-site contractors. That’s not always true with landed property.
If something breaks in a landed property you’re renting, you’re potentially more reliant on the good will and good practice of the owner to help you with the repairs.
Check your contract in advance to ensure there's clear understanding who is responsible for this.
2) Understanding ‘As-Is’
Malaysia’s rental market operates on an ‘as-is’ basis. That means you’re agreeing to rent a property as it is at the point of rental.
With larger properties like landed properties, you’ve got a whole lot more to check when it comes to understanding the status of the property at the start of a rental agreement, which means more potential for oversight.
3) Contract Length
As a tenant, you’re legally obliged to pay the rental fees for the full period agreed in a tenancy.
That means if you’ve got a two-year agreement and decide to leave after one year, you’re technically obliged to pay the remaining 12 months of payments.
With landed property trending towards higher rental prices than flats or condominiums, that legal and financial requirement can be a more serious burden to consider.
4) No Investment Returns
This is the same with any rented property, but it’s a serious point to consider.
If you’re paying out money in rent that you could be paying into a home loan for a property you’ve purchased, you’re not gaining any returns or acquiring any assets as a result.
That means you don’t enjoy the benefits of increasing prices for investment returns, or a steady stream of passive income from renting out your property.
With the potentially significant cost of renting a landed property, you should ask whether that money would be better spent paying for a property of your own.
What’s Next For Buying Or Renting Landed Property?
With landed property generally demanding a premium in price, it’s not always a matter of choice where you end up.
But if you’re lucky enough to have that option, it may well be down to preference which of these rental or purchasing arrangements you prefer.
So next time you’re considering whether to go with that landed house for sale, or the rental property down the street, be sure to take these considerations into account.
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