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Is renting more expensive than a mortgage?

Often renting a residential property is initially less expensive than taking a loan to purchase a property. This may not always be the case especially where rental properties are in short supply, such as the “boom” mining towns.

An investor speculates that the overall return inclusive of rent and appreciation will be greater than the purchase, interest, holding, selling and taxation cost of the property over time.

From the tenants point of view they get full use of the property without having to bear all the cost. Unfortunately over time rents are likely to increase whereas, if the property was purchased, the price and repayments should remain stable except for interest rate rises. The growing value will add to the wealth of the owner/occupier rather than the landlord.

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