Buy or Rent a House in 2023- Which Option to Choose?
Owning a house is a dream of many individuals. However, most of us cannot decide the ideal time to buy or rent a house. It often happens that after purchasing a property, the prices of real estate fall, and this tends to bring a thought of regret.
As purchasing a house is a dream, we want it to be a value for money. So the choice between renting and purchasing a new home is one that requires special consideration. The right choice will depend on a number of factors, including your own financial situation and the state of the market.
This blog will help you decide whether to purchase or rent a house in 2023. So, keep reading till the end.
Reasons for Buying a House in 2023
This list highlights the advantages that you may enjoy by purchasing a house in 2023.
- No Uncertainty of Lease Agreement
By purchasing a house, you can let go of any fear of your lease agreement ending. Also, you do not need to pay rent every month once you buy your perfect home. Moreover, by buying a house you do not need to renew a lease agreement, which could have unfavourable terms.
- A Good Investment
If you are planning to live in a city for a long time, buying a house is a worthy investment. Not only does it offer a sense of belongingness and achievement to new homeowners, but real estate is also a good long-term investment. It appreciates in value over time and if you are planning to relocate, you can put your home on rent or sell it for profit.
- Tax Benefits
On purchasing a house with a home loan, you can enjoy certain tax benefits. For instance, you can avail deductions of up to ₹1.5 lakh under Section 80C for the principal component of home loan repayment. For paying interest on a home loan, you can get a maximum deduction of ₹2 lakh under Section 24.
Reasons for Renting a House in 2023
Here are a few advantages of renting a house over buying in 2023.
- High Mobility
If you are living in a city alone and have plans to relocate in the future, renting a house is a wise decision. You can choose to rent a flat or house according to your budget and family needs for only the time you are living in that city.
- Low or No Maintenance Cost
Unlike homeowners, tenants do not need to bear the cost of damage and deterioration to the house. For instance, if there is a pipeline leakage or damaged ceiling, it is the landlord’s responsibility to fix these issues. However, this is not a universal fact. Tenants must study the lease agreement properly and make sure the same is mentioned there as well.
- Immune to Price Fluctuations
When you rent a house, you need to pay a fixed monthly rental as mentioned in your lease structure. Price fluctuation in the market is less likely to affect your periodic rents. Therefore, you only need to pay a uniform amount to the landlord until further notice.
- Income Tax Benefits
If you are staying in a flat or house on rent, you can claim the House Rent Allowance (HRA). The HRA depends on which Tier level your city falls. For tier 1 cities, HRA is 50% of your basic salary while it is 40% for tier II and III cities. The HRA component of your salary is exempt from taxes under Section 10 (13A) of the Income Tax Act.
Top Things to Consider before Buying or Renting a House in 2023
Here are a few important points you must consider before buying or renting a house in 2023:
- Location of the Property
Location and connectivity plays an important role in determining the worth of a property. You may often come across certain properties that offer best-in-class amenities and spacious rooms. However, if it lies in a deserted area with a sparsely populated neighbourhood, it may not be a very good choice.
Therefore, it is mandatory to do locality research before renting or buying a house. This will help you analyse the usual population of that neighbourhood and whether it is a safe area to live with family. You also need to pay special focus to amenities like banks, schools, shops, medical centres, etc., when selecting a property.
- Transportation and Connectivity
While conducting locality research, you must consider the frequency of public transportation like buses, autos or metros from your area. Also, if your property lies in the city outskirts, consider learning more about the best modes of commutation that runs between the main city and your place.
Also, ensure that the property has easy access to public transportation. Check the distance to the nearest bus stops, railway stations, and metro stations from your place and the shortest time to reach there.
- Be Mindful of Falling for Superficial Things
If you are out house hunting, you may notice that many brokers make a huge deal about trivial things. For instance, they make you notice things like attached swimming pools, gyms, and community halls in the residential complex. Although these are good for recreational activities, they are of no good if the flats or houses do not support basic amenities.
Similarly, houses that offer the best sunset scenery may seem to be a great place to live, but these houses can get unbearably hot during the summer. You need to be mindful of such factors before purchasing a property as we know Indian climates shift to extremes throughout the year.
- RERA Registration
The Real Estate Regulatory Authority (RERA) is a body formed under Real Estate Regulatory Authority Act, 2016 to monitor transparency in this industry. Every property – residential or commercial, needs to be registered under the RERA body of its respective states.
Before purchasing a house, you need to check whether it is registered under RERA or not. This will help you verify the authenticity of the house.
Real Estate Sector in 2023
With the growth of population, demand for residential and commercial real estate in Tier II and III cities will likely continue growing rapidly. With little room left in the major metropolitan cities, rental gains from properties in these cities will also grow with time.
Many major residential projects that include apartment complexes, villas and independent houses are developing here. Furthermore, 2023 has witnessed demand for larger living spaces owing to the popular work-from-home or hybrid working culture. The organised retail property stock is expected to increase by 28% to 82 million square feet by 2023.
As the housing demand has recovered from the period of stagnation due to the COVID-19 pandemic, the positive momentum is expected to continue in the next year. While interest rate hikes in the upcoming year may make homeownership more expensive, increasing prices of newly purchased homes make it a dependable investment for many people.
The uncertainty of situations that we are facing for the past two years compels most of us to own a house. This offers us a sense of accomplishment, security and a plan for the future.
Whether you want to purchase or keep renting a house in 2023, it is necessary to keep an eye on interest rates and property prices. The decision will also depend on your own preference and financial situation.
Frequently Asked Questions
What are the hidden charges I should check for before buying a house?
While choosing your perfect home, it is necessary to keep in mind certain hidden or additional charges. These are stamp duty, registration charges, brokerage fee, GST, and maintenance deposit. You must pay such applicable charges along with the original selling price of your house.
Will the prices of houses increase next year or will they become more affordable?
In 2022, there has been a trend of rising house prices due to an increase in demand and inflation. According to most experts, these trends will likely continue in the next year. While it will increase the cost of owning a home, homeowner’s equity will also increase.
What are Preferential Locality Charges?
Preferential Locality Charges (PLC) are an additional fee that you must pay to a broker or seller to reserve a particular location of a building complex. The PLC varies between projects, builders, and time. For premium or large-scale projects, PLCs can be quite high.
Is a parking space fee mandatory while purchasing a house?
A parking space fee is another additional fee one needs to pay while buying a house. This charge is mandatory for tenants owning any two-wheelers or four-wheelers vehicle. The parking space fee depends on the area you live in and the parking space you need.