The rent trap is something people – Millennials and Generation Z, especially – are struggling with of late in South Africa. The rent trap can loosely be defined as the state of being bound, usually by circumstance, to constantly renting property. It is very simple to fall into the rent trap due to the convenience that comes with renting. However, in the long run, one may realise that it is no longer a viable option. Difficult as it may be, it is possible to escape.
Start young and start small
Purchasing property becomes increasingly difficult with the passing of time. This is due to various reasons, including the increase in the price of property in general, the increase in the total amount of financial commitments that one has each month, not qualifying for the home loan amount that one requires, etc. For these not to be the reasons that you do not buy a home, it is best to be prepared. When looking to rent, find a place that is reasonable and comfortable. Luxury is not important when you are aiming at saving a deposit for a home loan, which significantly reduces your loan term. This goes for other expenses as well, for example, your car. Having a car that is not expensive and fuel efficient could be what closes the gap between your income and being able to save enough for a deposit.
Do your research
Avoid being hasty with your decisions when it comes to which property to rent. Research which property will work out cheaper, including all levies. A programme called FLISP (Finance Linked Individual Subsidy Programme) is a programme under the Department of Human Settlements that is aimed at assisting households who qualify for a mortgage bond in acquiring residential property for the first time. There is a criterion that applies to this programme, more of which you can find out about on www.flisp.co.za
While renting a property usually works out cheaper each month as compared to a mortgage bond instalment, it does not contribute to reducing the cost of your assets. The earlier you buy property, the better. For any further information on the purchasing of property, do not hesitate to contact us. 😊