Renting or Buying Homes in Europe?

In my country, lots of people think it’s always better to own your home rather than rent it. On the other hand, people are complaining more and more about how difficult it has become to actually purchase a house. That means that lots of people are still renting but rather would buy.

Benefits of Buying

Let’s start with the benefits of buying your home. After all, I bought my home directly when moving out of my parent’s place instead of renting first.

If you buy a house, you’re fixing the costs of living there. Say you purchase an apartment for 200,000 euros, then that’s the price you’ve paid. Your largest expense, most likely your mortgage, is based on that initial purchase price. Every month you’ll pay the same amount to the bank (if you have an annuity loan) or a smaller amount every month (if you have a linear loan).

Your real costs actually become smaller due to inflation. The 1,000 euros you pay ten years from now are worth less than the 1,000 you pay today. So fixing your cost of living is a benefit of buying.

Another benefit is less measurable, but could be described as “home ownership pride”. If you own your home, you take better care of it, or even feel “more at home” than if you were to rent it.

Buying a house also gives you more security. As a renter, you might be getting kicked out of your home every year by landlords who don’t want you to be in there long-term. As a home owner, this will not happen. The bank could kick you out if you don’t pay your mortgage on time, but that has to happen for months in a row and even then, the process is slow.

Benefits of Renting

Renting also has its benefits. You wouldn’t say that when talking to people here, instead you would hear things like “but rent is higher than the mortgage on a comparable home”. While that might be true, it’s not the complete picture. Also, it skips over some very substantial benefits of renting a place.

The biggest benefit of renting that comes to mind is flexibility. Where as a home owner, if you want to move you have to sell (or rent out) your old home, which can take a lot of time and effort. As a renter, you simply let your landlord know you won’t be there anymore and you’re gone. Just make sure to abide by your contract with regards to your notice period.

The second big advantage of renting is that you don’t have to pay for maintenance. Owning a home can be expensive, if you have to replace roofs, kitchens, or bathrooms. As a renter, that’s none of your business. You call the landlord and get it fixed, without having to pay the 20,000 euro bill.

Plus, as a renter you don’t have to have a large capital to get started. Usually you have to pay the first month’s rent plus the deposit and then you can move in. When buying a home, a lot more money is needed.

What Should Young People Do?

This question is leading a bit, because I think in the long term, almost everyone should own their home. However, for starters this might be different.

You have to save a serious amount of money before you can buy your home. If you need to move out before acquiring this capital, renting might be better.

Another reason why renting might be better, especially for young people, is having freedom in finding work in other cities. If you are not 100% set on a certain company or career, you might be better of renting a place first, to be able to move when you want to change jobs.

Eventually, buying a home might be wise, but there’s no shame in renting something.

Do you rent or did you buy? Let me know in the comments below!

4 thoughts on “Renting or Buying Homes in Europe?”

  1. It’s always interesting to hear others’ thoughts about this because every person has their opinion about it, some more argumented than others but in the end, I also believe that owning is better. It’s also why I got my own home (and wrote about it ;) ).

  2. Love the article, it’s a very personal decision if you want to rent or buy. I have no own home at this moment, since the house prices are very high and I have cheap rent. Once I really settle in one city, I would probably buy!

  3. I’m posing this question to myself right now.
    I’ m 23 from the Netherlands, and I have 14k euros I’ m not sure how to invest.

    I was thinking to either use them as a down payment for a mortgage or invest them in ETFs (specifically Vanguard ftse all-world ucits), but I just started investing so I’m not too confident about my own decisions right now.

    What would you do with those money?

    • I am not in a position to give financial or investment advice. So what I would do is think about the future. Do you know you want to live in a place for the next 10+ years? Then buying might be interesting, but not always.
      Regarding investing, if you need the money soon to buy a house, probably don’t invest everything. If you don’t need the money, you could invest but all depends on your goals and risk appetite. Make your own decisions :-)