Pros and Cons of Renting Property

Advantages of Renting:

Lower upfront costs: Deciding to rent a property will cost you much, much less than owning one in the very beginning. It is essential to consider if you don't have sufficient funds to buy a property through a cash purchase or even financing. Down payments are at least 20% in Dubai. 

Less paperwork: If you read the paperwork required to purchase property above, this may be a huge relief, and you won't need a lawyer as well. All you need to peruse is the rental contract and the Ijari (which can be processed by the real estate agent). 

Increased flexibility and mobility: As mentioned above, owning a house comes with the disadvantage of being "stuck" with it for a while, at least until you can resell it. As for rent, it may not be a problem at all! You can enjoy moving out of your rented space anytime you wish, either before renewing your rental contract by providing two months' notice to the landlord or paying the equivalent of two months' rent if you want to vacate the premises immediately. For people who want flexibility in their lives, such as nomads, this can be exhilarating. Having multiple options constantly will satisfy such individuals. Renting may also be suitable for people who have just moved to a specific location and are uncertain of their surroundings and people whose jobs or income sources are not steady or stable. 

Peace of Mind: Just like homeownership has peace of mind, so too does rent! You have less commitment than owning a house, and you don't have to worry about all the financial strains attached to buying a home. You also don't have to worry about things such as depreciation, losing market value, and all the fees associated with owning a property, including closing costs, taxes (if applicable outside the UAE), and service charges. In short, if the property belongs to someone else, so too are its inherent ownership costs and problems!

Worry-free maintenance: Most landlords provide at least one year of free comprehensive maintenance for their properties, during which they fix major issues associated with the property. Some of them don't have such a limit and will fix any significant problems as long as you are a tenant. However, even after the year passes, landlords are still responsible for providing maintenance to the building structure, common area facilities. They cover major maintenance to the premises such as AC units, electric distribution boards, heat/smoke detectors, fixing any waterproofing or leakage problems, replacing water heaters, and floor and ceiling tiles. Of course, all these maintenance items are not applicable if you or your visitors cause any damage. In this case, you are responsible for repairing such damage.

Disadvantages for rent:

Lack of ownership: First, let's talk about the elephant in the room: homeownership. How does that make you feel? If you rent a property, no matter how pretty or how much time or money you have spent renovating it or taking care of it, it's still not yours to keep. You may have to move out one day, and you will have to answer to your landlord. If the landlord wishes to evict you and reclaim the property for whatever reason, they can do so to the fullest extent of the law by giving you notice. This can be an unpleasant experience for some people. If you own your house, no one can "evict" you unless you default on your payments or break the law. If you purchase a home and complete its payments either by cash or through a mortgage, you won't have to worry about spending money on rent. Some people feel that money paid for rent is thrown away and that nagging feeling may remain for many years, especially once they leave the premises. This is called an "opportunity cost." 

Higher long-term expense: This one is relevant to the previous disadvantage. Imagine renting a property for years and having nothing to show for in the end. Sounds like a sad novel, doesn't it? Well, back to Robert Kiyosaki's simplified view of assets and liabilities. Paying for rent takes money out of your pocket, so that is a liability. Let's keep it as simple as that. 

Unpleasant rental increase surprises: You may have an unpleasant surprise when your landlord suddenly decides to increase your rent. However, the Real Estate Regulatory (RERA) states that a landlord must provide 90 days' notice for increasing the rent amount. This also applies to the previous disadvantage if the landlord decides to end the contract (or evict you). 

Limited options and not so renovation-friendly: Since this home is not yours and was purchased by someone else, its current design or status may not suit your style or needs. Upon vacating the premises, most landlords require tenants to return the property to the landlord in good condition exactly as it existed before the contract's commencement date (except for fair wear and tear). This means that you can't make any major modifications to the property, and even if you do, you will have to return it the way it was in its original condition. Otherwise, you risk losing your security deposit or incur additional fees. 

Unpleasant Contractual Terms: Make sure you go through all the articles mentioned in the rental contract, no matter how long. For instance, you may be surprised to find out that pets are not allowed on the premises, as it's clearly mentioned in the rental contract. Another unpleasant surprise that I had personally experienced was an "Annual Rental Contract Renewal Fee," which can cost you a few thousand Dirhams and is usually mentioned in the contract's addendum. In my case, it cost a whopping 2500 AED per year. 

The "Should I buy or rent?" conundrum is more relevant today than ever, and property prices are shifting towards a buyers' market. There are several factors to consider to make the most informed decision that suits your personal and financial needs. The best way to answer this question for yourself is to answer the following questions truthfully: 

- Can you afford to buy a home, whether by cash or through financing? Realistically, what can you afford right now? 

- Do you have a steady, stable source of income that can cover mortgage payments for years to come? 

- Are you looking for short-term or long-term? 

- Do you need flexibility and more options anytime? 

- Can you handle all the costs associated with owning a home, such as maintenance, service charges, taxes (if applicable outside the UAE), and others?

- Do you know where you're currently standing and where you're heading with your career and family goals? 

- Do you have a backup plan in case things go awry? 

Only you can answer these questions. Contemplate the information presented in this post, and find out what works best for you. 

Good luck! 

With Yalla Deals, we can help you find that perfect property to buy or rent.