Buy or rent property? Therein lies the dilemma
Most people dream of having their own home. This desire is evident in the prevalence of home ownership: 7 out of 10 households in the world are homeowners. In Latin America and the Caribbean, the ownership rate is approaching 65%. What is the reason? It is said that the stability offered can encourage access to social networks and to more active community life. But the main reason seems to be financial.
Housing is usually the most important asset of a family. Many families have increased their wealth through property and have managed to leave a legacy to their children.It is no wonder, then, that most people think that renting a house is a waste of money.
However, a ‘home’ is not necessarily the best option for everyone. There are several reasons. On the one hand, property is expensive. Not only housing prices make property unaffordable for many, also the high transaction costs of buying and selling make the benefits of capitalization materialize only in the long run. Legal costs, registration and payments to intermediaries reach 11% of the house value on average in Latin America, from 6% in Argentina to 16% in Guatemala. If this maintenance costs and taxes are added it is clear that the benefits of owning only occur within several years and sometimes decades.
That is why the tenancy may be a better alternative for population groups that need or want greater mobility. For example, young people prefer the flexibility offered by the rent to move in search of better employment or studies. And so the probability of choosing this type of ownership is much higher regardless of income level, educational attainment or the type of household in which they live.
Gradually the governments have realized this and have begun to supplement policies with alternative rental housing for households that cannot or will not exercise the option of owning at the present time. For example, the Chilean government launched a subsidy for youth from lower strata that can supplement their income and access to a quality rental housing.
All these reasons suggest that renting is a viable alternative and that there is no universal ideal housing for the entire population. The choice is all yours.