Renting Property vs Buying Property

There are advantages and disadvantages to owning a home vs renting a home. Comparing the two side-by-side allows prospective buyers/renters to make a well informed decision that fits their budget, meets their expectations and aligns their dreams with reality.



Section 14(2) of the Consumer Protection Act No 68 of 2008, (“CPA”) allows tenants to cancel a fixed term residential lease agreement at any time by giving the landlord 20 business days’ notice in writing, making it easier to relocate on short notice. Section 14(3) b (i) of the Act does stipulate that the landlord may impose a reasonable cancellation penalty to recover damages suffered from the early cancellation, so while there is more flexibility in cancelling a rental agreement, it does not come without penalties.

The upfront costs are lower and usually only include the deposit (equal to one month's rent), first months' rental paid in advance, and moving costs.

Major repairs are for the landlord's account. However, the Rental Housing Act stipulates that the tenant is required to maintain the property in a clean, tidy, & safe state of repair. The tenant is liable to maintain, replace or repair fixtures and fittings such as globes, handles, locks etc. before the lease term has ended so as to return the property to the landlord in the same condition as was received.  

Renting does not have the same long-term financial benefits as owning a property. The tenant is paying off the landlord's bond and not contributing to the growth of their own wealth. However, tenants tend to have more expendable income than homeowners as they are not having to put additional funds into their homeloan. This gives tenants the freedom to invest or save elsewhere. 

The landlord and/or lease agreement enforce certain restrictions on the use of the property which the tenant agrees to upon signing the rental agreement and taking occupation. These include, but are not limited to, the allowance of pets (regardless of whether the complex/estate is pet friendly), the number of visitors, decorative changes/alterations etc.

Tenants are only required to pay insurance on the contents of the home (the tenant's personal possessions) and not the home itself. 



Major banks require a written 90 Day Early Settlement Notice to cancel a bond. Early cancellation incurs financial penalties. Additionally, many sellers are dependent on the sale of their own home to buy elsewhere, which further restricts mobility and the ease with which one can relocate at short notice.

Property purchase costs are significantly higher than costs pertaining to renting a property. Buying a home includes the Conveyancers fees, bond registration, transfer costs, rates clearance and Deeds Office fee, as well as other 'lesser known' ongoing costs such as electricity, water and utlities connection, rates, taxes and levies, private security, insurance and more.

Moreover, the homeowner is responsible for all costs relating to general repairs, maintenance and renovations. 

While the financial responsibility of owning a home is great, owning property includes long-term financial benefits, for example, security, equity and potential wealth creation. The value of a home usually appreciates over time, and potentially resulting in a profit at resale.

The house is the buyer/homeowner's legal property. There is greater freedom in its use and creative control over decorative/structural alterations and renovations.

The homeowner is responsible for the payment of property insurance, as well as insurance on the contents of the home. Homeowners must remain disciplined to stay abreast of managing the financial responsibility of homeownership. 

Thinking of Buying or Renting?