Is it better to rent or buy property in 2021?

Around 60% of French people today own their home: for the portion of the population currently renting, the question of acquiring property may arise. Market fluctuations and banking policy may however encourage staying as a tenant, at least for the time being. This status, which may seem precarious, also offers advantages to consider on a case-by-case basis, and some people do not have the desire or the interest in becoming homeowners. Let us examine the reasons behind the choice, before taking stock of the property market in 2021.

Why become a homeowner?

Building assets

This is probably the main reason encouraging a purchase. Renting remains, in principle, a transfer of money to a third party solely for the purpose of occupying a dwelling. Ownership, including the repayment of a loan, constitutes – apart from interest – an investment that is recovered when selling the property.

At the end of the monthly payments, no further payments are required: wealth is then immobilised, which will continue to increase in value following the progression of property market prices. Of the various investments available to a saver, property is among the safest.

Customising to one’s taste

Secondly, owning the property ensures that it can be transformed as much as necessary, to adapt it to our own tastes. Renovation work and alterations can be carried out in complete peace of mind – after obtaining the necessary authorisations from the public authorities where this proves necessary (for alterations affecting the exterior in particular).

If resale in the more or less near future is the objective, be careful not to personalise the property beyond what is reasonable: it could subsequently have difficulty appealing to the majority! Similarly if you intend to let it.

Living with complete security

Final point: homeowners are assured of being able to keep a roof over their heads whatever happens (or almost). The tenant, however, remains subject to the owner’s goodwill, who, despite the protection afforded by the lease, may under legal conditions force them to leave the accommodation.

Security is also financial when projecting over the long term: once the mortgage is repaid, the financial burden of occupying the dwelling decreases significantly. This can prove beneficial in retirement when income decreases.

Why remain a tenant?

Adapting to one’s life circumstances

The choice of renting – when both options are available – may result from lifestyle or uncertainty about the future. A person who travels frequently and for long periods, for example, would prefer a property they can part with easily and quickly. Life constraints can also make accessing ownership difficult, when no deposit is available or professional situation is uncertain, for example.

Reducing costs

Another point of importance: council tax, which can represent a heavy burden for some households, and which the tenant logically should not bear: the owner must include the charge in the rent if necessary. As for residence tax, its reform is seeing it disappear for a large part of the population.

Also, the maintenance cost of a house or flat proves considerable: from facade renovations to roof replacement, including the replacement of equipment such as the boiler, expenses can quickly mount. The astute tenant can save these sums and thus build a financial asset anyway.

Avoiding credit

Accessing ownership means, in the majority of cases, taking out a loan from a bank. This very action represents a both financial and long-term commitment, rather uncomfortable to live with. A change in circumstances making repayment of the monthly instalments difficult, brings significant problems – both financial and psychological – with the pressure that the creditor will not fail to bring to bear quickly.

As a tenant, financial freedom remains the order of the day. It will be simpler to leave the property to find one more suited to the current circumstances.

The property market in 2021

To make the decision whether or not to acquire a property, determining the advantages and estimating one’s budget is not sufficient. The economic context can influence the decision, by affecting the conditions for obtaining credit.

For the year 2021, the lights are green and indicators continue their course in line with previous years. Thus, property prices remain on an upward slope, while borrowing rates remain at their lowest.

If in 2020, the health crisis and the underlying economic difficulties caused a wait-and-see attitude among the various players and notably banks reluctant to grant new credit, we ultimately note that the volume of transactions decreased by only 4% compared to 2019. The situation in 2021 is completely unblocked and the property market is performing better than ever. Additionally, with successive lockdowns and everyone’s caution, household savings have reached heights and can facilitate property acquisition projects.

If becoming a homeowner is often described as a life goal in itself, this status will not suit everyone and we invite you to carry out genuine reflection on your vision for the future. If applicable, it is always possible to combine both strategies: remain a tenant of your primary residence and make a buy-to-let investment that allows you to own another property. Each to their own solution!