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Thursday, Sep 19, 2019

On the go: How people are choosing to live on rent for life

Experts say that it can be a feasible alternative to loans and EMI, if you plan your finances right.

real-estate Updated: Sep 06, 2019 16:20 IST
Vanessa Viegas
Vanessa Viegas
Hindustan Times
(iStock)
         

In a culture where home-buying is considered the ultimate financial investment, living on rent for life might seem like an odd choice. But in a generation that’s always on the move — for work, for leisure, for a change of scene — a lot of millennials are treating renting the way they do takeout. You don’t want to cook a meal (or own, maintain and pay for a home) yourself, so you’re willing to pay for the luxury of someone else doing it for you.

It also means you can live in a better area than you could otherwise afford — renting vs buying could be the difference between living in Andheri and living in Mira Road.

“There are also families and individuals today who would rather invest their surplus income in other asset classes like mutual funds or stocks,” says Anuj Puri, chairman, Anarock Property Consultants, “which makes sense if the main objective is wealth generation and there is no inherent desire to ‘settle down’.”

Planning ahead

Still, there is a right way and a not-so-right way to manage living on rent for life. To begin with, a family must make a fixed reservation of their monthly income for rental outgo, and factor in a possible rental escalation of up to 10% a year. “Allocate no more than 35% to 40% of total monthly income for rental outgo, or else managing contingencies and other priorities becomes very difficult,” says Puri.

One way some young couples juggle the financial burden is by living on rent in the city, and buying a starter home on the outskirts, so the loan liability is smaller, and they can earn rent from their flat to help offset the rent they’re paying.

As a newly married couple in their late 20s, renting felt like an obvious choice for Aayushi Barman and her husband Ayush Kapur as it kept them loan-free. “Renting also gives us a good understanding of the kind of neighborhood we might like to buy a house in, if and when we decide to,” says Barman, who lives in Chembur.

“Since we both lived at different ends of the city — Vashi and Malad — before marriage, we also wanted a more central residence so we could commute to work more easily.”

Dhiraj Amin, 31, meanwhile, moved from a home he owns in Kalina to a rental flat in Mira Road, with his wife, so they could live in a larger home. “The rents are far lower here than what I earn from renting my home in Kalina,” he says. “So now I don’t have to wait to buy my dream home; I already live in it.”

Upgrades and convenience have been key perks for Jagadesh Achar, 54, of Mangaluru, who has lived on rent in Thane for 10 years. Achar has moved twice during this period, each time to a bigger home.

“Rental homes offer great mobility,” he says. Especially in cases when the size of your family increases over the years or you’re not happy with the society, or there is a water shortage, cracked roof or leaking walls,” he says.

Swapan Kumar Ghoroi, 58, a mechanical engineer, leases out his starter home in Silvassa to help him pay his rent in Panvel, where he’s been living with his family for 22 years.

“Though the increase in rent over the years has been steep, it’s still a more feasible option than buying a home in Panvel, which will cost me close to Rs 1 crore,” he says.

No Benefits

Because jobs are more mobile now, ownership might not be that important, says Uma Ganesh, 45, from Tamil Nadu who’s been renting a home in Goa for eight years.

Rahul Grover, CEO, Sai Estate Consultants, agrees. He says, for the average middle-class adult, renting an apartment is definitely the cheaper option, as he does not have to put down a large sum of money on a home. Furthermore, as today’s working class is always on the move, with migration happening a lot more than it did previously, buying a house in a particular location is not a financial choice they would want to make. “Additionally, by renting a home, one is not under the financial duress of taking out a loan, and repaying the same, as one does not have to pay maintenance charges which are taken care of by the landlord,” says Grover. “There are also no returns on income spent on renting a home.”

On the other hand though, owning a home caters to a deep psychological need, which a rental home cannot provide, says Puri. “And from a financial standpoint, rental outgo is a dead expense which provides no long-term benefits other than fulfilling immediate residential needs,” he adds.

After a few years, the expenditure involved in renting that can get to you, adds Kanika Gupta Shori, founder and COO of Square Yards, an online realty agency. “Add to that the inability to alter or renovate your living space in any manner — paint the home, drive a nail in the wall, put up your favourite art. Additionally, there is the stress of moving.”

First Published: Aug 31, 2019 21:22 IST