Rent vs Buy | How to Make the Right Housing Decision

Should I Rent or Buy a House? It’s a question on many minds, and it’s easy to get stuck in the ‘should I, shouldn’t I’ loop.

But honestly, in this rent vs buy house debate, we’re missing the most important part: What kind of life do you actually want? It’s too often framed as affordability, property value, and future returns, but it’s so much more.

It boils down to what you’re after. Is it financial security, a place to call home long-term, or the freedom to change your life without being tied down? Sure, owning a home sounds like the ultimate goal for many, but renting also can be the smarter choice.

TBH, there's no one-size-fits-all answer when it comes to the rent vs buy house decision. What’s ‘best’ depends on you. Ready to find out?

What Does Renting or Buying a House Mean?

Renting and buying a home are two very different choices, each with its benefits.

In cities like Delhi, Mumbai, or Bangalore, where change is constant due to work or personal reasons, renting lets you relocate without being tied down. You're free from long-term financial commitments.

Buying a home, however, is a different story. With every mortgage payment, you build equity and ownership. Plus, owning your space offers a satisfaction renting can’t match. You can customize it to your liking and benefit from property value appreciation in cities like Pune or Hyderabad.

Understanding these differences helps you make the right choice for your lifestyle. Keep reading to see what each option offers.

Key Differences Between Renting and Buying

Cost Comparison: Upfront and Ongoing Expenses

Many people assume renting equals financial struggle, but that's not the case. Many financially stable people prefer renting strategically because it offers flexibility and allows them to put their money to work elsewhere.

What's even better is that renting usually requires less upfront cost. In most cases, you’ll only need a security deposit of 2-5 months’ rent on average. Now, let's compare this to buying a home.

Upfront Cost Calculation

• Renting: Security deposit = 2-5 months’ rent
• Example: ₹20,000 rent = ₹40,000 - ₹1,00,000 upfront
• Buying: Down payment = 10-20% of the property’s value
• Example: Property worth ₹80 lakh = ₹8,00,000-₹16,00,000 upfront

As you can see, the upfront cost of renting is significantly lower.

Monthly Payment Comparison

• Renting: A 2-BHK in Bengaluru could cost ₹20,000-30,000 per month.
• Buying: Home loan EMI for the same property could easily exceed ₹50,000 per month.

While renting may be the more flexible and less financially stressful option in the short term, buying a home can be a smart move for long-term wealth creation.

Maintenance and Responsibilities

When you rent, maintenance is generally the landlord’s responsibility. You only need to worry about minor issues and everyday upkeep, such as cleaning or changing light bulbs. The owner mostly takes care of anything major.

Compare that to buying a home, where all maintenance falls on your shoulders. Whether it’s fixing a leaking roof, replacing broken appliances, or maintaining a garden, you bear the cost and effort.

Flexibility and Mobility

Renting offers the freedom to move without having to sell property. It lets tenants move quickly when their lease expires, without the burden of a mortgage or property taxes.

In contrast, owning a home can sometimes feel like a ball and chain. Let's say, Rohit, a marketing executive in Bangalore, landed a dream job in Mumbai with a short joining deadline. As a homeowner, he couldn’t just pack up and leave.

Finding tenants on short notice was tough, and managing a property remotely came with risks, e.g. late payments, maintenance issues, and the uncertainty of long-term occupancy. Meanwhile, his home loan EMIs and upkeep costs didn’t pause. If Rohit had been renting, relocating would have been as simple as ending his lease.

In short, renting gives you more mobility, while homeownership provides stability. If you value the freedom to move easily, renting is the way to go. But if you're in a position where stability and long-term planning matter more, buying a home makes more sense.

Building Equity and Ownership Benefits

While renting may be cheaper short-term, homeownership offers advantages beyond just basic financial considerations. One key benefit is that it shields you from the financial burden of rising rent prices due to inflation.

Moreover, owning a home provides long-term financial security, especially in retirement. Once the mortgage is paid off, your home becomes a valuable asset you can sell, rent, or leverage for loans, giving you financial flexibility. For many, their home is one of the largest assets in retirement.

For example, in 2024, Pune's average property rate hit an all-time high of INR 6,590 per square foot, a solid 11% increase from the previous year. This means your home could become a valuable asset as its value continues to climb.

Renting, however, doesn’t offer these same benefits. While you're paying for a place to live, you're not building equity. That said, renting has its own upside. By not putting money into a down payment, you can invest that cash elsewhere and potentially grow your wealth in different ways.

In our rent vs buy house discussion, let’s explore the tax implications next.

Tax Implications: Deductions and Benefits

In India, owning a home comes with certain tax benefits. For homebuyers, the Indian Income Tax Act offers significant advantages under Section 80C, allowing a deduction of up to ₹1.5 lakh on principal repayment of a home loan.

Additionally, under Section 24(b), you can claim up to ₹2 lakh annually on interest payments for a self-occupied property. If the property is rented out, there’s no upper limit on the interest deduction, making it a potential wealth-building strategy.

First-time buyers also benefit from Section 80EE, offering an additional ₹50,000 deduction on interest payments, provided the loan amount doesn’t exceed ₹35 lakh and the property is valued at ₹50 lakh or less.

In contrast, renters can claim tax benefits under Section 10(13A) through the House Rent Allowance (HRA), applicable if your salary structure includes it. For those not receiving HRA, Section 80GG allows deductions up to ₹60,000 annually if certain conditions are met.

So far, we've dissected the rent vs buy house debate by exploring key differences in cost, flexibility, and tax benefits. Now, let’s get straight to the point and highlight renting vs buying pros and cons.

Renting vs Buying: Pros and Cons

Before making a decision, it’s important to see how renting vs buying pros and cons stack up. Each option has its strengths and trade-offs, depending on what aligns best with your lifestyle goals and financial plans.

Whether it’s understanding the renting advantages over buying or weighing the long-term benefits of ownership, we’re about to take a closer look at the bigger picture.

How to Decide Between Renting and Buying

A few months ago, Business Insider shared an interesting story. Tori Dunlap, a multimillionaire and financial expert, decided to rent instead of buy a home. This shows that renting or buying is about more than just money; it’s about your lifestyle. Here’s what to consider as you make your move.

Assessing Your Financial Readiness (Goals)

Before choosing to rent or buy, take a moment to assess your finances. Buying a home can strain your savings with hefty upfront costs like down payments and closing fees. Here's how to assess your readiness:

• Savings check
• Income stability
• Debt levels

If you’re still building your savings or managing debt, renting may be the more practical option for now. For example, a young professional with a good salary but limited savings would be better off renting. This allows time to build financial stability without draining funds on a down payment.

Take your time; there’s no rush. Focus on strengthening your financial base first.

Considering Your Lifestyle and Career Plans

When deciding whether to rent or buy, it's important to match your decision with your personal life and career goals, not just your finances. It’s about where you see yourself in the years to come. So, ask yourself four questions:

• Am I ready to start a family? Owning a home gives you the stability and space to grow.
• Do I want to settle down? Homeownership offers permanence and long-term security.
• Am I looking to build wealth? Buying a home lets you create a valuable asset for the future.
• Am I unsure about my plans? Renting gives you the flexibility to move without the responsibility of ownership.

Tax Implications: Deductions and Benefits

In India, owning a home comes with certain tax benefits. For homebuyers, the Indian Income Tax Act offers significant advantages under Section 80C, allowing a deduction of up to ₹1.5 lakh on principal repayment of a home loan.

Additionally, under Section 24(b), you can claim up to ₹2 lakh annually on interest payments for a self-occupied property. If the property is rented out, there’s no upper limit on the interest deduction, making it a potential wealth-building strategy.

First-time buyers also benefit from Section 80EE, offering an additional ₹50,000 deduction on interest payments, provided the loan amount doesn’t exceed ₹35 lakh and the property is valued at ₹50 lakh or less.

In contrast, renters can claim tax benefits under Section 10(13A) through the House Rent Allowance (HRA), applicable if your salary structure includes it. For those not receiving HRA, Section 80GG allows deductions up to ₹60,000 annually if certain conditions are met.

So far, we've dissected the rent vs buy house debate by exploring key differences in cost, flexibility, and tax benefits. Now, let’s get straight to the point and highlight renting vs buying pros and cons.

Renting vs Buying: Pros and Cons

Before making a decision, it’s important to see how renting vs buying pros and cons stack up. Each option has its strengths and trade-offs, depending on what aligns best with your lifestyle goals and financial plans.

Whether it’s understanding the renting advantages over buying or weighing the long-term benefits of ownership, we’re about to take a closer look at the bigger picture.

How to Decide Between Renting and Buying

A few months ago, Business Insider shared an interesting story. Tori Dunlap, a multimillionaire and financial expert, decided to rent instead of buy a home. This shows that renting or buying is about more than just money; it’s about your lifestyle. Here’s what to consider as you make your move.

Assessing Your Financial Readiness (Goals)

Before choosing to rent or buy, take a moment to assess your finances. Buying a home can strain your savings with hefty upfront costs like down payments and closing fees. Here's how to assess your readiness:

• Savings check
• Income stability
• Debt levels

If you’re still building your savings or managing debt, renting may be the more practical option for now. For example, a young professional with a good salary but limited savings would be better off renting. This allows time to build financial stability without draining funds on a down payment.

Take your time; there’s no rush. Focus on strengthening your financial base first.

Considering Your Lifestyle and Career Plans

When deciding whether to rent or buy, it's important to match your decision with your personal life and career goals, not just your finances. It’s about where you see yourself in the years to come. So, ask yourself four questions:

• Am I ready to start a family? Owning a home gives you the stability and space to grow.
• Do I want to settle down? Homeownership offers permanence and long-term security.
• Am I looking to build wealth? Buying a home lets you create a valuable asset for the future.
• Am I unsure about my plans? Renting gives you the flexibility to move without the responsibility of ownership.

Analyzing the Housing Market in Your Area

The local housing market is a critical factor that can make or break your decision. If you’re in an area where home values are rapidly appreciating, buying could be a smart investment. Over time, your property could increase in value, giving you financial returns and building equity. This can be particularly beneficial if you plan to stay in the area for several years.

On the flip side, if home prices are flat or falling, renting might be a safer bet. Buying in a declining market can put you at risk of losing money, especially if the property's value doesn’t increase as expected. Renting allows you to avoid this risk and gives you more flexibility in uncertain markets.

Quick Tip????: Don’t forget to assess the rental market too! If rents are rising quickly, it could be a sign to consider buying (especially if you're paying more in rent than you would for a mortgage)!

Key Factors to Consider

Factor	Renting	Buying
Financial Situation	Lower upfront costs (security deposit + rent)	Significant upfront costs (down payment + closing costs)
Career Flexibility	More flexibility (easier to relocate)	Stability (ideal for those with long-term career plans)
Long-Term Plans	Short-term adaptability	Long-term investment and equity building
Family Needs	Easy to move with family, especially for short-term needs	Offers space for growing family and long-term stability
Housing Market Conditions	No risk of market downturns	Potential for long-term appreciation and investment

By evaluating these three key factors, e.g. financial readiness, lifestyle goals, and market conditions, you’ll be in a much better position to make an informed rent vs buy house decision.

Renting vs Buying: Real-World Scenarios

We’ve already established that the choice between renting and buying isn’t always black and white. Let’s jump into how this decision plays out across different Indian cities.

City-Specific Comparisons

Understanding the cost of living is key when deciding where to invest, rent, or settle down.

Property Prices

• Tier 1 Cities: In India’s metro cities like Mumbai, Delhi, and Bangalore, property prices are astronomical, making it tough for first-time buyers.
• Mumbai: ₹26,780/sq. ft. (South Mumbai, Bandra)
• Delhi: ₹17,229/sq. ft.
• Bangalore: ₹9,299/sq. ft.
• Tier 2 Cities: In contrast, cities like Raipur offer a much lower price, making them attractive for first-time buyers.
• Raipur: ₹3,810/sq. ft.
• Bhopal: ₹5,112/sq. ft.
• Jaipur: ₹6,979/sq. ft.
• Lucknow: ₹6,336/sq. ft.

Monthly Rent

• Tier 1 Cities: Renting a 2BHK in prime areas can be costly.
• Mumbai (Bandra, South Delhi, Connaught Place): ₹50,000–₹1,00,000 per month
• Bangalore: ₹30,000–₹60,000 per month
• Chennai: ₹15,000–₹25,000 per month
• Tier 2 Cities: More affordable rental options.
• Raipur: ₹8,000–₹20,000 per month
• Nagpur: ₹10,000–₹20,000 per month
• Surat, Jaipur: ₹15,000–₹30,000 per month
• Indore, Dehradun: ₹12,000–₹30,000 per month

In a Nutshell…

• If you’re a real estate investor or homebuyer aiming for high returns, Tier 1 cities might be more suitable despite the higher costs.
• For those looking to rent affordably or settle in a less hectic environment, Tier 2 cities offer remarkable savings while still providing basic urban facilities.

Your 60-Second Guide: Rent or Buy?

Still unsure? Below’s a quick checklist to help you decide on rent vs buy a house ????.

Smart Tools and Resources for Decision-Making

Making smart real estate decisions isn’t always easy, but the right tools and resources can tip the scales in your favor. Whether it’s simplifying the rent vs buy house equation or staying ahead of market trends, advanced tools and expert advice give you the edge to act decisively.

Real Estate Market Analysis Tools

The real estate market is full of moving parts. So how do you make sense of it all? With the right tools! Aurum PropTech is a cutting-edge PropTech company that introduced PropTech Pulse, offering real-time insights into property values. The insights and market trends it provides are like the pulse of the market.

While it won’t hand you a simple ‘rent or buy’ answer, it provides useful resources like the Transaction Search, helping you break down the financial side of things. And that's not all. You’ll also find other handy calculators, such as the RERA Finder, Circle Rate Calculator, SIP Calculator, and Stamp Duty Calculator, all in one place.

Looking for more specific guidance on renting vs. buying? You can check out Zillow's Rent vs Buy Calculator or Calculator.net’s Rent vs Buy Calculator. With these tools, you have everything you need to make a well-informed decision based on solid data.

Consulting with Real Estate Advisors

In real estate, the right advice can be worth its weight in gold. An experienced advisor does more than deal with paperwork. They bring a deep understanding of the market with valuable insights that you won’t find online.

Whether you're purchasing your first home or expanding your property portfolio, a trusted advisor gives you a clear picture of the market and your options. It’s not about making decisions for you, but empowering you to make them confidently.

At Aurum PropTech, our experts spot emerging trends, provide key insights into local market conditions, and offer tailored advice based on your specific needs. With the right guidance, you can make informed, confident decisions for your future.