Renting vs Buying a Home in Ghana which is Better?

Pros of renting include:

1. Flexibility
2. Low initial cost
3. Maintainance
4. Amenities
5. Location options
6. Budgeting
7. No depreciation risk

Are you caught between renting or buying in Ghana? I understand. The decision between renting and buying a property in Ghana is one that many most first-time home buyers in Ghana face at some point in their lives. Some people are of the view that renting is better, otherwise argue the opposite. Well, which is better? If you are caught in limbo, I will explore both for you to have a clear distinction between the two to make a decision. Let’s begin.

 

Pros of Renting a home in Ghana

Flexibility

Renting is like having your live in the box. One of the key benefits of renting a property in Ghana is the flexibility you have. You have the freedom to choose the duration of your lease, allowing you to adapt your living arrangements to changing circumstances, such as job transfers or lifestyle changes. If you are a career person, moving from one to another or one region to another in Ghana is eminent which is better if you are renting.

Read also: How Much is a Downpayment on a House in Ghana?

 

Lower Initial Costs

Although landlords in Ghana required 6 to 12 months or 24months advanced payments, this is pennies compare to the down-payment if you were to secure financing from the bank to buy your home. Also, you are spared the burden of having to pull your resources together to pay all cash if you were to buy a home in Ghana. Ghana is cash country meaning most home acquisitions in Ghana are hard cash.

Read also: Ghana Real Estate: First-Time Home Buyers in Ghana Tips

Maintenance

Depending on your agreement with your landlord, you are generally not responsible for the cost of maintenance and repairs of your rented property in Ghana unless otherwise stated in your lease agreement or contract. Landlords are typically obligated to address these issues promptly, alleviating the financial burden and hassle for you the tenant. If you were to buy your home, you will be on the hook for maintenance cost associated.

 

Amenities

Imaging getting access to all modern amenities in one property. Rental properties often come with a range of amenities such as swimming pools, gyms, or security services, depending on the type of property and the rental agreement. Perhaps you may not have all of that if you were to buy your new home in Ghana. These amenities can enhance the overall living experience for renters.

 

Location options

Renting offers the flexibility to live in desirable locations that may otherwise be financially out of reach for potential buyers. This can be particularly advantageous for individuals who prefer to reside in prime areas close to amenities and employment opportunities. In other words, you can afford to rent a home that fit your budget in prime areas or desirable places but buying a decent house there may be out of your league. Did you catch my drift?

Read also:Top Locations in Accra to Find Houses for Rent in Ghana

 

Budgeting

As they say “cut your coat according to your size”. When you are renting, it provides you a predictable monthly expenses, allowing you to budget more effectively. Renters in Ghana especially in larger cities like Accra and Kumasi, have a clear understanding of their housing costs and can plan their finances accordingly, without having to worry about unexpected expenses compare to if you were buying a house.

 

No Depreciation Risk

Whatever happens to real estate circle, renters may careless about it. Unlike property owners, renters are not exposed to the risk of property depreciation. Real estate prices can fluctuate, and in some cases, property values may decline. Renters are immune to such risks, as they are not directly invested in the property’s value. And when supply of homes exceed demand it is to the advantage of renters as they will have to pick where to rent and dictate rent terms.

 

Cons of Renting a house in Ghana

There is nothing under that sun that has no disadvantages. Here are the cons of renting vs buying in Ghana.

 

Lack of Equity

Perhaps one of the most significant disadvantage of renting is the absence of equity accumulation. While you may be paying your monthly rent, you do not build any ownership stake in the property. This means that you are not able to benefit from potential property value appreciation over time.

 

Limited Control

Renters have limited control over the property they occupy. You may face restrictions on making modifications or improvements, limiting your ability to personalize the space according to your preferences. You as a tenant may not be able to paint walls, install permanent fixtures, or make significant alterations to the property, limiting your ability to create a home that reflects your personal style. Any modification you choose to do on the property may have to be approved by the landlord depending on your lease contract.

 

Rent Increases

In General, rental agreements typically have terms allowing landlords to increase rent periodically. These rent hikes can disrupt a renter’s financial stability, especially if their income does not keep pace with the increases. In Ghana, it is common practice to see landlords increasing rent more than agreed on in the rent agreement.

Read also: House For Rent in Ghana: How much is average  Rent in Accra?

 

Instability

Another common practice is when the landlord doesn’t want you to live in his property and will not renew the lease term. The landlord may have his reasons such us his family moving in or you are a bad tenant to him/her. Whatever the other reasons may be you may experience a lack of stability due to lease terminations by the landlord. This can lead to frequent relocations, which can be disruptive and time-consuming.

 

Limited Long-Term Investment

Renting does not provide the opportunity for long-term investment growth. Instead of building equity, renters may find themselves continually paying rent without any tangible return on their investment. If you want to keep landlord rich, then keep renting. A hint: every GHS you pay to your landlord, you enriches him.

 

Pros of Buying a home in Ghana

 

Equity Building

One of the primary advantages of buying property in Ghana is the opportunity to build equity. Over time, as property values appreciate and mortgage payments are made, homeowners can accumulate equity, which can be a valuable asset in the long run. You can leverage this home equity as down-payment to use it to acquire additional property or make an investment. The opportunities are endless.

Read also: BUYING VS. BUILD A HOUSE IN GHANA, WHICH IS BETTER?

Stability

It is no brainer, owning a property provides a sense of stability and security. Homeowners do not have to worry about lease terminations or rent increases, allowing them to establish roots in a community and enjoy the comfort of a place they can call their own. No one will kick you out of your home, however, if you used mortgage to buy the home and default on your payments, your house will be foreclosed by your lender.

 

Freedom to Customize

Homeownership offers the freedom to customize and personalize the property according to individual preferences. If you are a homeowner in Ghana, you can modify the space, paint walls, and make changes to suit their lifestyle, creating a truly unique and personalized living environment. It is all up to you and how you want your house to look like.

Read also: How to Build Your Dream House in Ghana: Cost Estimates

 

Potential Rental Income

Homeownership opens up the possibility of generating additional income through property rentals. Homeowners can choose to rent out a portion of their property or the entire property, providing an additional revenue stream. I will touch again on that a little in this post.

 

Long-Term Investment

Real estate has historically been considered a reliable long-term investment. Property values tend to appreciate over time, offering the potential for capital gains and wealth accumulation. In Ghana, if you are a homeowner, you stand to gain from 5% property appreciation annually. This add up to your bottom-line.

 

Sense of Pride

Shelter over our heads gives us pride and security. Owning a home instills not only a sense of pride but accomplishment of something worthwhile. Being a home owner in Ghana provides a tangible symbol of success and a place to create lasting memories with family and loved ones.

 

Cons of Buying a home in Ghana

 

Financial Commitment

Buying a property requires a significant financial commitment upfront. This includes a down payment, closing costs, and ongoing mortgage payments in Ghana. If you are not one those born with a silver spoon in their mouth, you must have sufficient savings and stable income to afford these expenses in Accra.

 

Maintenance

As a homeowner in Ghana, you are responsible for all maintenance and repair costs. From routine maintenance to major repairs, like foundation issues, roof upgrade, plumbing, fire, etc. can be substantial and can add financial strain, especially for unexpected issues.

 

Market Volatility

Real estate markets can experience fluctuations, and property values may decline in certain situations. Homeowners can be exposed to market volatility, and in some cases, their property value may depreciate, impacting their overall net worth. Although Ghana’s real estate is market is upward spiral but as they say, “nothing is stable in life”.

Read also: The cost of building a single room self-contain room in Ghana

 

Limited Flexibility

If you are a property owner in Ghana it reduces flexibility compared to renting. Homeowners may face challenges when it comes to relocating for job opportunities or personal reasons, as selling a property can be a time-consuming and complex process. This is also depends on the property type and selling price tag. Average homes seat on the market from 6months to 2years or more. I know a friend who has been trying to sell his 20 units property for 3years now.

 

Property Taxes

As a house owner in Ghana you are responsible for paying property taxes otherwise called property rates. The amount of property tax owed can vary based on the location and assessed value of the property, and this additional expense should be factored into the overall cost of homeownership.

 

Mortgage Risks

When purchasing a property with a mortgage, there are inherent risks associated with interest rate fluctuations. Changes in interest rates can impact monthly mortgage payments and, therefore, an individual’s overall financial situation. This all boils down to the type of mortgage you choose.  Also, mortgage rate in Ghana are one of the highest in Africa which ranges from 11% for USD borrowers to 25% or 28% or more for local currency GHS borrowers. It is ridiculous. But that is the state of affairs in Ghana.

Read also: How to Self-finance or Use Mortgage Banks in Ghana to Buy Your Home

 

Initial Time

Buying a property requires significant time and effort. It involves researching the market and location, finding a suitable property, due diligence, negotiating the purchase, and completing the necessary paperwork and registration of your house at the lands commission in Accra or your region. The process can be time-consuming and may require professional assistance, such as hiring a real estate agent or lawyer.

Read also: The cost of building a single room self-contain room in Ghana

 

What costs more renting or owning?

Both cost more, both have their pros and cons. It is costly to put down 20% as down-payment for financing for a new home. However, you could create cash-flow if you adapt housing hacking investment strategy – rent out one unit and live in another. It is also costly if you are renting in Ghana as your rent add up overtime. However, it is cheaper to rent if you compare initial cost involved. The question of what is cheaper renting or buying in Ghana depends largely on the above factors.

 

My final words

The decision to rent or buy a property in Ghana is a complex one that depends on individual circumstances, financial goals, and personal preferences. Renting on the other hand offers flexibility and lower initial costs, while buying provides equity building and long-term investment potential. Again, it depends on your circumstances and financial strength. And there you have it. Was it helpful to you? Have you learnt one this in this post?

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