Why renting property can be a smart financial move

Renting is increasingly being seen as a strategic financial decision, says Paul Stevens, CEO of Just Property.

“Whether you’re working towards a deposit or exploring more flexible ways to grow your wealth, renting can offer the space, stability and financial control needed to build your future on your own terms,” he says.

Buying a home involves significant upfront expenses. In addition to the deposit (usually around 10% of the purchase price), buyers must also cover legal fees, transfer duty, bond registration and bank charges.

Combined, these can amount to hundreds of thousands of rands. Once the purchase is final, ongoing expenses such as rates, levies, insurance, maintenance and security must be included in your monthly budget.

By contrast, Stevens points out that renters generally pay a single, predictable monthly amount. In some cases, tenants are also responsible for utilities such as electricity, refuse, water and sewerage.

However, they are shielded from fluctuating bond repayments and are often not liable for costly repairs or maintenance, which remain the landlord’s responsibility.

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Renting in South Africa can also allow people to invest in education, start businesses or live in better-located areas near work, schools or public transport.

These are areas they may not yet be able to afford to buy in. Renting also gives tenants time to build their credit score, reduce debt, research neighbourhoods and clarify what they really want in a home before making a long-term financial commitment.

Flexibility and future planning

Renting offers greater flexibility than ownership. If your job or personal circumstances change, ending a lease is typically simpler and less stressful than selling a home.

The 2025 Emerging Trends in Real Estate report from PwC notes that affordability and lifestyle flexibility are key reasons why younger households are choosing to rent. With interest rates still elevated, many South Africans are postponing home purchases.

“Renting can make this possible by freeing up income to put towards a deposit and other upfront costs,” says Stevens. “But this only works if the tenant avoids overcommitting.”

A common mistake, he says, is signing a lease at the upper limit of what you can afford, simply for short-term comfort or lifestyle appeal.

“Doing this undermines one of the key advantages of renting: the ability to save. If your rental absorbs your entire budget, there’s little room to set money aside for a deposit, emergencies or other goals. Rather approach your savings with the same commitment you would apply to a home loan.”

Rent smart and save smarter

Stevens recommends renting below your affordability threshold.

“For example, if your goal is to buy a R1.5m home and the estimated bond repayment would be around R15 000 per month, consider renting a place for R10 000 instead. If you save the R5 000 difference each month, that’s R60 000 per year.

“In just over two years, you’d have your R150 000 deposit. This excludes interest or investment returns if your savings are in an interest-bearing account.

“If, on the other hand, you rent a more expensive property at R15 000 a month, you’ll struggle to save at all. That makes your journey to homeownership far longer.”

Rent and invest

Some renters may not be planning to buy a home in the near future. Instead, they see renting as an opportunity to grow their wealth through diversified investments such as shares, ETFs or unit trusts.

A home loan is often the largest debt an individual will take on. While it is a productive debt tied to a tangible asset, it also concentrates your wealth in one place. That carries risk.

“Some investors argue that your money may be better put to work elsewhere,” says Stevens.

“The long-term growth potential of equities, especially when held over the average term of a home loan, can be significant.

“Investing early, even modestly, allows you to benefit from compounding returns.”

This does not mean that buying property is the wrong choice. It reinforces the idea that renting, when combined with smart financial planning, can be a valuable phase in wealth creation.

“Whether your goal is homeownership or building a stronger investment portfolio, what matters is how intentionally you use this time,” Stevens concludes.

“Either way, renting gives you options. It offers more freedom and less commitment, more liquidity and less risk, more financial control and less pressure.”

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