“I have to buy a house!!!…or do I? Buying vs Renting a house”

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I couldn’t put my finger on it, but the Smoothie tasted better than usual. I was in no way going to let my friend who was trying to persuade me to get a Range Rover over a G-wagon disturb my Saturday afternoon underneath this Acacia wood summer hut. Suddenly, I was brought back to my senses when a Fortune whizzed past me. I would have described the driver in no uncertain terms, if not for my Boss who was making some enquiries from a Mini-mart.

I wasn’t a ‘Big Man’…. Yet. Just an intern with the Lands Commission on a physical inspection duty in the area. “I need to buy for myself one of these houses to live in with my family”, I thought.

As a young man, I have the desire of getting my own place away from my parents as quickly as possible. I think you do too even though, you are trying to find reasons to deny it. Gotcha!

Going back to JHS 1, Maslow’s theory of needs places shelter as one of the basic needs of man and therefore irrespective of your socio-economic status, the basic need for shelter cannot be ignored. In Ghana, and to a large extent Africa, it is also seen as a sign of wealth and affluence to have a house to call your own and I daresay it is almost an abomination to be a politician and not own a house.  Thus, owning a home goes a long way to boost the ego and self-esteem of the home-owner as well as satisfying the basic need for

Getting the perfect house to live in involves a colossal amount of money and this is no different from other real estate products. Housing, with all its concomitant charges, is the largest expense of an average family (yes, more than the glamorous wedding ceremony you are dreaming of).  The truth is that not everyone will become a home-owner, some will be tenants mainly due to the financial implications. According to an online survey, 91% of Ghanaians are either renting accommodation or living with their nuclear family with the rest being home-owners.

At one point in your lifetime, you will be faced with the issue of finding accommodation for yourself and one question you will ask yourself is whether to either buy or rent. Ask anyone which he/she will prefer, buying or renting, and the more likely response you will hear is the option to buy. This is not surprising due to the reaction people have towards the idea of renting. Many people believe that renting a house is almost a waste of money as you do not get equity in the property after your lease term expires. However, there are various factors to consider in either buying or renting a property. This article sheds some light on why one may prefer buying to renting a house and vice versa.

Why you may consider buying over renting?

  1. You do not pay monthly rents ever again in your life (after paying off your mortgage) to a landlord again and such monies can be invested in other opportunities for income. You may make other payments but they cost far less than monthly rents to a landlord.
  1. You face no anxiety in looking for a new place after your old lease expires and your landlord is not willing to renew your tenancy. Finding the perfect house to live in can be very stressful.
  2. The house belongs to you and you can keep it for speculative reasons. Real Estate values are more often than not increasing and thus people buy properties to sell them later on when property values increase in order to make a nice profit from the sale of the property.
  3. You are not faced with ‘funny’ contractual terms between you and your landlord. Imagine being told by landlord to be in the property by 10pm or the gates will be locked or that you cannot also have visitors living with you for more than 3 days.
  4. In Ghana, landlords demand the payment of “advance rent”. Imagine making an upfront payment for a property commanding a monthly rent of Ghc850.00 for a term of 5 years before entering the property. It might prove a herculean task raising that money on the spot but mortgage payments are periodic and thus, you have some breathing space to pay off the mortgage.
  5. You are not at a risk of potential eviction by the landlord. Landlords of rented properties are within their legal rights to evict tenants from their property.

Did you know?

Rents are supposed to be paid on a monthly basis and it is against the laws of Ghana to be told to be paid “advance rents” for more than 6 months.

Why you may consider renting over buying?

  1. It is prudent to rent if you do not plan on living in the same place for long. If your job demands that you travel often or if you are adventurous and would not want to be tied down to a specific location, to rent would be the best option for you.
  2. You will need extra financial muscle (mortgages) in buying a house. Most Ghanaians are not qualified to take mortgages due to the high prices and the interest rates.
  3. The onus of the cost of repairs and insurance payments usually lies on the landlord and in the event where you have to cater for it, your rent will be reduced by an amount that will be commensurate with the cost of expenditure. Property maintenance can be quite capital intensive.
  4. Renting is cheaper in the short-term, likely to be cheaper than periodic mortgage payments.

Believe it or not, there are people around the world who find it more prudent renting a house than to buy it. The option to rent or buy solely lies on you and you need to consider a lot of factors (including the above stated) before making a choice. After all, it might not be prudent enough to buy a house just because society demands that of you. You need to consider your financial situation and also look at the kind of lifestyle you want to live.

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About author.
Arku, Robert Nutifafa graduated from the Department of Land Economy (Kwame Nkrumah University of Science and Technology) in the year 2017 and did his national service at the Department as a Teaching and Research Assistant. He is currently pursuing his Master’s degree in Urban Planning.

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