Rent or buy : which is the best option ?

Rent or buy ? This is one of the most frequently asked questions in the real estate industry. For some, becoming a homeowner is a crucial step in their lives, synonymous with financial stability and personal success. However, real estate prices have reached new highs in recent years, leading more and more people to ponder whether it's more advantageous to rent or to buy.

In this article, we will examine in detail the advantages and disadvantages of each option to help you make an informed decision based on your financial situation, future plans, and lifestyle.

I want to buy : a safe investment or a risky gamble ?

If you plan to stay in a home for at least five to seven years, buying can be a wise decision. In fact, the results of the National Employment Survey in 2019 show that 66.4% of urban households own their homes, surpassing renters (20.9%) by more than three times.

Advantages of buying :

1. Equity Growth : The net value of a home is the difference between the value of your home and the amount of your mortgage. Equity gains are essential for long-term financial independence.
2. Stable Monthly Payments : If you have a fixed-rate mortgage, you ensure that you pay the same amount each month because you've locked in an interest rate for the entire duration of your loan. Regular payments allow you to budget wisely and plan for the future.
3. Freedom to Make Changes and Decisions : It's hard to put a price on the autonomy that comes with homeownership. As a homeowner, you are free to make changes and decisions regarding your home that best suit your family's needs without having to seek the approval of a landlord.

The advantages of purchasing :

However, this freedom comes with additional responsibilities:

1. Property Taxes : As a property owner in Morocco, you are responsible for paying annual property taxes. These taxes are typically calculated as a percentage of the property's cadastral value.
2. Obtaining Building Permits : If you plan to carry out construction or renovation work on the property, you must obtain the necessary permits from local authorities. Rules and procedures for obtaining permits may vary depending on the region where the property is located.
3. Maintenance and Repairs : Like any property, you are responsible for the upkeep and maintenance of the property. This may include minor repairs such as water leaks or electrical malfunctions, as well as major renovations like kitchen or bathroom upgrades.

Renting: A Smart Choice or a Financial Pitfall?

If you are in search of housing, renting can be an attractive option for several reasons:

Advantages of renting:

1. Lower Upfront Costs : Unlike buying a house, renting requires less money upfront. You don't need to make a significant initial investment.
2. Quick Relocation : If you rent a property, you can easily move by giving your landlord a notice of one or two months, especially if you rent on a month-to-month basis.
3. No Risk of Property Value Decrease : Unlike homeownership, renting a property means you don't risk losing your capital or having to repay a higher mortgage than your property's value in case of a decline in property value.
4. Ideal for High-Cost Markets : If you want to live in an area with high real estate costs, renting is often a better option than buying.
5. Maintenance Responsibility Lies with the Landlord : The landlord is responsible for most maintenance and repair work, which can be very convenient for those who don't want to deal with these tasks.

Disadvantages of renting :

However, it's important to keep in mind that, while it may seem convenient, there are downsides to consider before signing a rental agreement:

1. Landlord Can Raise Rent at Any Time : One of the main disadvantages of renting is that the landlord can increase the rent by 8% typically once every three years. This can pose financial difficulties for tenants who didn't expect a rent increase and are already struggling to pay their rent.
2. Limited Ability to Modify Your Home : As a tenant, you can't make significant changes to your living space without obtaining prior approval from your landlord. This can be frustrating for tenants who want to personalize their living space.
3. Many Rental Properties Prohibit Pets : Many rental properties do not allow pets, which can be a challenge for tenants with four-legged companions.
4. Bound by Rental Contract Rules and Obligations : Rental agreements often contain restrictive clauses that tenants must adhere to. If the contract prohibits subletting, for example, the tenant must comply, which can sometimes limit their freedom and flexibility in housing.
5. Landlord Can Evict You at Any Time : Tenants should be aware that their landlord can evict them at any time if they want to reclaim the property for personal use or for their descendants. If the tenant doesn't vacate the premises within two months after receiving an eviction notice, the landlord can seek forced eviction through the court. Therefore, tenants must be prepared to leave their rental property in the short term if they receive an eviction notice from their landlord.

In Conclusion

The decision to rent or buy will depend on multiple factors. The advantages and disadvantages of each option should be carefully considered before making a decision.

We recommend conducting a thorough analysis of your personal situation and consulting with real estate professionals to help you make an informed decision. With well-informed reflection, you will be able to make a wise choice that best suits your lifestyle and future plans.

Salima Hamrini Editor and journalist specializing in real estate.

25 Oct 2023