“Being a home owner or renting” This is an age old argument which many have had to address in their lifetime. It is also not uncommon for one to hear the argument against renting which goes along the line where people say that renting is like throwing your hard earned cash down the drain whereaas you can buy your own property with that money which is being directed towards rent.
In Fiji, renting is a major market in the real estate industry and in a recent survey conducted by Property.com.fj has revealed that close to 45 percent of the people who took part in the Survey are currently renters. This is a a market which is continuously on the lookout for homes to own as well.
Owning and renting each have their own advantages but at the end of the day, your budget and financial standing is what carries weight. Owning a home is a financial commitment taht requires you plan ahead and reflect on where your life will be headed and also will see a huge dent on your family savings. However renting may also have a lot of advantages. Therefore we shall look at the two scenarios and weigh our options and make a decision for yourself.
Before we go further, it is best to do a checklist
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Income (salary or other means)
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Expenses
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Disposable Income
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Savings
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Loans and Hire purchase and other repayments
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Equity on hand
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Home loan or No
Once this has been completed, it will then be easier to make an informed decision.
Renting
In the recent 2018 Property Fiji Real Estate Survey, there was a huge demand for affordable houses for rent with 38% saying they needed houses immediately and in the short term (4 months) whilst another 35% of respondents intend to rent in the next six months. This shows that renting in Fiji is a more preferred form of housing.
In Fiji, it is the norm to pay a bond and then the month’s rental. As such, one is paying less to shift into a house as opposed to buying a property where one would have to save up and raise thousands of dollars before taking out a home loan or even securing a property. This is one of the arguments used to justify renting.
When renting, if you have general repairs around the house like a faulty wiring or a leaky faucet, the landlord will fix it and if it simple things which you caused such as a ripped gauze, it will be cheap to repair. Whilst you may not have your own personalized room, renting will see you save a lot on repair works around the house.
When renting, relocating will be much easier especially when you have a new job in another town or city or even in another country as you will be able to give a month's notice (or depending on your rental agreement), pay outstanding bills and shift. All you will have to do is pack up your personal belongings and get ready for your next destination.
Another reason as to why renting is preferred is that there is less financial constraints such as market risks, taxes and even insurance paid as the landlord baers all these costs. The value of a property goes up and down. During times of recession and devaluation of the Fijian Dollar, home owners will be the hardest hit as they will be left owing more than the value of their homes. Whilst we will see the economy bounce back, we will also see a large number of foreclosures on mortgages.
In today’s world, flexibility is very important. Many will struggle to make ends meet or fall on hard times once in their lifetime and that experience can beset us at any time. As such, this would mean cutting down on our expenses, downgrading into a more affordable living space This is a major reason why many tend to rent as it would be hard to rid of a house when falling on hard times whereas when renting, all ne has to do is move a smaller home which would mean less rent.
With the popularity of strata apartments and condos on the rise, it is not surprising to say that renting may seem a better alternative as it will also mean access to facilities such as swimming pools, play areas and parks. Professionally managed property will take a lot to burden off one as there will be help to tend to all maintenance issues or any problems that arise. This would mean you do not have to call around and look for plumbers, carpenters and even jack-of-all-trade to help you out when you are caught in a dilemma.
Buying a house.
When you consider the pros and the cons, owning a house seems to be a better alternative. Some of the reasons for this include the fact that you own a property. There is ride in home ownership, a place to call your very own and it ties you into a community. Yours costs are predictable and you are more stable. You are now a owner of a property, something you can so rightfully boast about.
When you buy a house, the value of the house increase or appreciated every year. For example if your purchase your home for $150, 000 and the annual appreciation rate is 3% so in 30 years time, your house will cost close to $450, 000. This increases the value of your home and you will not get the same return if you are renting.
Owning a home through a mortgage sees one ensure that payments are done on time and correctly. Thus a good debt payment history will see your credit score with the bank improve and increase your eligibility to take another loan or even open the door to better loan terms and interest in future purchases.
When you own a house, your home value increases. When it is time for a move and you will have to sell your house, you reap the benefits whereas for those who rent, when the landlord sells the property, they walk away with nothing. The longer you are a homeowner, the better it is for you and the higher the profits.
Owning a home also teaches one how to balance the books and live within one's means. The mortgage repayment will see a fixed amount set aside every month or every salary, we will them have a set amount of money at our disposable which can be used for other expenses such as food, fares, stationery, clothes and bills. We will also be able to set a target for savings. So instead of spending money on endless rental payments, you will be able to use that money for your mortgage and rest assured that it is not going to waste and that it is securing ahome for you to retire to later in life.
Ways of owning your own home
In Fiji, commercial banks assist in terms of home ownership. The various banking institutions in the country have individual requirements such as payslips, credit statements from other institutions if you have hire purchases and other payments as well as bringing in a certain amount as deposit in many cases, it may be up to 210-2% depending on the amount you are looking at. Following this, checks will be done and your eligibility assessed, the paperwork for the house will also be needed which includes the title and a sale & purchase agreement.
In many cases, raising the deposit may be a little hard however with the recent changes implemented by the Fiji National Provident Fund (FNPF) will assist as people will now be able to access their superannuation fund to assist towards buying a property. This coupled with the Fijian Government First time home buyer Incentive, buying a property in Fiji at the moment has been made relatively easier.