What do you think is better renting or buying a house for you? In fact, more than half of Saudis living in Riyadh do not own their own home and choose to rent a property instead? But this picture changes dramatically once you leave the capital.
Across the country, more than sixty percent of the population are homeowners, while about a third of Saudis overall are renters. So how do you decide whether buying or renting is right for you? Keep reading this article to check all the factors that might help you decide which is best for you.
Buying a house or renting which is better for you?
Making such critical decisions require lots of knowledge within the market, and the country. This article will provide some information that will help make calculations, know your preference, and decide which is better? renting or buying a house in KSA?
Bear in mind when renting or buying a house that each one of these two options has different expenses, when compared to each other, renting a house might cost you more than buying and vice versa. These are some of the expenses for renting a house in KSA.
- Renting in Riyadh will cost you between SR 2,000 and SR 12,000 for a 2-3 bedroom flat. While in Jeddah it will cost you more.
- Furnished or unfurnished, since an apartment that needs to be furnished will cost you approximately between SR 25,000 and SR 40,000.
- Security deposit is a refundable amount of money a tenant should pay.
- Extra expenses like repairs, operating expenses, taxes…etc.
- A square meter will cost you between SR 3,000 – SR 6,000 in the city center in Riyadh and Jeddah. While it will cost you SR 1,500 – SR 5,000 outside the city center.
- Furnished or unfurnished house, since a house that needs to be furnished, will cost you approximately between SR 25,000 and SR 40,000.
- A down payment is required when buying a house.
- Mortgage or loan deduction and for how many years.
Price to rent ratio
You can use this method to check which is better for you, renting or buying a house? You can do so by these two simple steps.
- Find two similar properties, one available to buy and one to rent.
- Divide the price of the property for sale by the annual rent for the second property. This is the P/R ratio.
- If P/R ratio is above 20, it means that the cost of buying the property will likely exceed the costs of renting.
After calculating expenses you will see which one will cost you less renting or buying a house in KSA.
You must keep in mind that renting or buying a house cost should not exceed 28% percent of monthly salary or income including(payments, insurance..etc).
Moving or staying
Are you planning to move from one house to another or you would like to stay longer? This is one of the most important factors to decide on renting or buying a house since obviously renting a house will require you to move more often from one place to another.
Know the Saudi laws
Whether you are a Saudi or a foreigner you must first know and understand the laws of buying a property in KSA. E.g. Foreigners can buy real estate after granting approval of licensing authority, however, they can not own a property in Mecca or Medina, unless they inherited it. While renting especially for ex-pats might be less complicated.
Improving or upgrading home
Are you a fan of redecorating and redesigning your house? Would you like to paint your house walls, change floor tiles or replace your bathtub? Then we recommend you to buy a house instead of renting since you can make all the changes you want when you own a property and no landlord will ever prevent you from doing so.
Home prices change
A change to home prices may occur whether it is rising home prices or dropping prices. So if you are planning to buy a house and sell it afterward you need to know that changes may occur on the price of your property. However, a house rent cost will only change if the landlord decides to raise the rent or sell the property
In this article, we were able to provide you with crucial information to help you make the right decision when it comes to renting or buying a house in KSA. I hope you enjoyed reading this article and you found it beneficial.
If you did! Why don’t you read the other article Where to buy cheap good-quality moving boxes in KSA ? and other articles about different topics on our Bayut blog KSA. You can also leave a comment in the section below if you have any questions for us.