Chapter 5.3, Problem 2R

To determine

To Discuss: The Advantages of Buying and Renting

Explanation of Solution

Following are the advantages of Buying and Renting:

1. Advantages of Renting:

• Flexibility: Renting a property allows for more flexibility than ownership. Renting is ideal for people who move around for work or who are new to area and cannot afford to buy property.
• Fixed Rent Cost: Rent cost are fixed for the term of tenancy agreement. The exception for this is the tenancy agreement allows for an increase, or if the tenant agrees for an increase.
• Security of Tenure: Once there is sign of tenancy agreement, then you are protected and bound by its terms. That means you will be able to remain in property until the agreement expires.

2. Advantages of Buying:

• Increasing Value: Buying gives you better level of control over home, and if the property increases its value through market conditions, then there will be benefits.
• No Uncertainty: there is any fear and anxiety that is caused by the possibility of an untimely termination of the lease agreement by the landlord.
• No Landlord Hassles: When you buy a property, you are fully on your own control and therefore you don’t have to deal with landlord anymore, be it a minor repairs or a complete overhaul.

Buying Advantages	Renting Advantages
Increasing Value	Flexibility
No Uncertainty	Fixed Rent Cost
No Landlord Hassles	Security of Tenure

Economics Concept Introduction

Introduction:

Buying refers to an action or an instance of purchasing something. Buy is the common and informal word; applying to any such transaction, like; to buy a house or vegetables from market. Buying is to acquire possession, ownership or rights to the use of services by payment.

Renting usually refers to fixed periodical return made by tenant or occupant of property to the owner for the possession and use. It is the portion of the income of an economy attributable to land as a factor of production in addition to capital and labor.