BUS2204 – Written Assignment 5
a. Describe in detail the advantages and disadvantages of renting versus owning a home.
There are pros and cons to renting a property, just as there to owning a home. Both options
have their own advantages and disadvantages, for example renting allows you more
expendable money in the short term, while owning a house gives one the sense of security as
it is considered a long-term investment. Let’s look at all the pros and cons to help you make a
well-informed decision of what will suit you, right now.
Advantages of buying a home
The advantages of owning a home will offer the long-term benefits of security, equity and
potential growth in personal wealth.The value of a home will appreciate over time and if you
decide to sell, you can earn a profit off the sale. When you buy a house it becomes your legal
property, which allows you greater freedom in its use without restrictions often enforced by a
Landlord.
Being a Homeowner allows you creative control of your property. You can alter the property,
including décor changes, landscaping and renovations, to suit your needs and your style. As a
homeowner, you have the option of buying to rent which enables a Homeowner to generate
income from renting out the property. This income can be put towards the home loan. Being a
Homeowner who ensures repayments are made on time can improve your credit profile. Not
only will you have a large investment to your name, but paying your monthly bond
repayments on time increases your credit score. As a homeowner, You have the option to
refinance your bond amount should you wish to withdraw a large amount of money to pay for
major purchases.
Lastly, by owning the home, an opportunity to save money in the long term is viable as there
are possible tax deductions related to income-generating properties.
Advantages of renting a home
Renting a property allows an individual more flexibility than owning a home. This is ideal for
those who could be faced with sudden changes such as a job relocation. Renting requires no
long-term commitment from a Tenant, and is the best option if you don’t intend on staying in
one place for a long time. As a Tenant, there is the possibility of living in an area in which
you could not afford to buy. Moving out for tenant is easier than a Homeowner as there is no
stress of finding someone to take over the lease, or finding a Buyer to purchase the property
as this is the responsibility of the Homeowner or Landlord. The only insurance required by a
Tenant will be to cover the contents of the home, while all maintenance work on the property
is for the Homeowner’s account, as is homeowners insurance.
Last to note, a fter paying rent, a Tenant may have additional money which they can use to
invest elsewhere, whether it is saving towards buying a house or investing in the stock
market, and need not worry about putting additional funds into a home loan.
Disadvantages of buying a home
The disadvantage of being a Homeowner is it comes with huge financial responsibility
including bond repayments and regular house maintenance. There are additional costs to
homeownership and these usually include rates, taxes, insurance, and maintenance for which
the Homeowner is responsible. A Homeowner may runs the risk of not making any profit
through resale. This is often caused by economic factors such as a recession or high interest
rates, or simply through a particular location becoming less desirable. A Homeowner has less
mobility when it comes to being able to move home than a Tenant who rents on a short-term
basis. A Tenant can leave a property after fulfilling the notice period, which is usually one
month. However, a Homeowner is likely to be dependent on selling their home before being
able to buy a new one, and therefore it might take longer to be able to move homes once the
decision has been made to do so.
Disadvantages of renting a home
A Tenant is bound by the rules of the lease agreement, which can impact the freedom to use
or renovate the property. You cannot make changes to a rented property without the consent
of the Homeowner. When renting, you will often have to deal with a Rental Agent who will
then be the liaison between you and the Homeowner. This can result in issues taking longer
to resolve since there is a 3rd party involved. Renting offers no wealth creation or return on
investment since the property will never legally belong to the Tenant, and instead, the Tenant
is paying towards the Homeowner’s home loan. When renting a property, you will have no
control over annual rental fluctuations which are directly affected by inflation. Lastly the
downside is that there is no guarantee that a lease will be renewed when it expires.
b. What is the role of the title search in making a home purchase?
The purpose of a title search is to determine who owns a property and has other rights to it,
including any sort of lien on the property. It's usually important to do a title search before
buying a property to ensure that the entity selling it actually has the right to do so.
a title search can be conducted when you need to understand who owns a property
