Tan Kin Lian's Blog: Home ownership

Wednesday, March 03, 2010

Home ownership

There is a general belief that owners will take care of their home better than tenants. This was the reasons given to promote home ownership.

This may be true to some extent. But, it should not be exaggerated. The care that is given to the home and environment depends not so much on ownership, but on the behavior of the person. A higher income person is likely to take care of the home better than a person struggling to make a living at a low income.

Most people in Switzerland rent, rather than own their homes. I believe that they do take care of the property as well as home owners. This is just a belief, as I do not have the chance to verify it.

The poor people who lives in slums in some countries cannot afford to take care of their own living, so they are not likely to take care of their homes either.

I believe that it is better to treat home owners and renters equally, rather than to promote home ownership on a wrong belief that it leads to a better society. If more people rent their homes, they will be able to move closer to their place of work and reduce the travelling time and expense. This will reduce traffic congestion and improve quality of life.

Some people will argue that it is not possible for everyone to live near their place of work. I agree. We only need to have (say) 30% to live near their place of work to reduce traffic congestion by 30% - which is a lot.

The next step is to abolish the stamp duty and legal fees for selling a home. This will reduce a financial obstacle and encourage some home owners to move closer to their place of work.

Tan Kin Lian

7 comments:

Anonymous said...: My relatives live in Basel, Switzerland. They rent an apartment for years.; March 03, 2010 8:23 AM
Anonymous said...: I believe having a nomadic lifestyle (moving from place to place) encourages creativity, risk taking & ultimately productivity.

too often in the boring neighbourhood, not much is happenning. no passion, no excitement.

like the old saying, "when you feel comfortable with where you are, its time to move on".; March 03, 2010 9:26 AM
Anonymous said...: The govt wants the population to be tied down by 30-yr mortgages and focus on just working and living day to day. The elites don't want the masses to have gung-ho spirit and risk taking attitudes. They want compliant workers who are scared of job loss and willing to work harder and harder just to survive.

This may be necessary and even good in the 70s and 80s. But even by the 90s, this policy was already obsolete and unsustainable. That's why no choice but to open the floodgates to foreign workers, in order to preserve the monopoly of power for the elites.; March 03, 2010 1:53 PM
Anonymous said...: It can be stressful and inconvenient to rent as one may be at the mercy of landlords. Quality of living will thus be adversely affected and outweigh any advantages of renting compare to owning.; March 03, 2010 2:00 PM
Anonymous said...: Mr tan, thanks for your excellent blog.

When I turned 30 (10 years ago), I was desperately trying to get onto the home ownership ladder. As a single, I could not buy a HDB at that time, so I struggled to buy a condo. I was gainfully employed, doing well in my career, and could afford the lifestyle. I operated on cashflow.

A few years later, I was yearning to start my own business, which I did but the burden of the mortgage hanging over my head was almost too much to bear. Within a year, I was almost underwater with poor cash flow and many bills to pay. I rented out my apartment, and moved across the road at half the rent I was collecting.

When the market improved, I sold out, paid all my debts and felt as free as a bird.

One has to simply break the mindset that home ownership is a sign of success. I beg to differ. Financial freedom is the real sign of success.

I concentrated on my business and bought another piece of real estate, this time in a much better location, with decent yield.

I am still a tenant elsewhere.

I bought the other piece of property as a hedge against inflation. I bought within my means and even in the current depressed rental market, it's still cash flow positive. I geared, but not to the hilt. I view it as an investment, a hedge, not a home, although I would be very happy if I had to live there.

Where I am living now is very comfortable, again, I am paying less rent than I am collecting, all costs considered.

To an earlier poster who said you are at the mercy of the landlord, it's true. There are nasty landlords out there. Just take the time to find someone who is reasonable, treat them well, pay your rent on time and keep the place as if it was your own. As a landlord too, whenever I get a good tenant, I make sure I do what I can to keep him.

At the end of the day, aside from true happiness, we should strive for financial freedom. I always tell my friends, you should not sleep on/in the bulk of your net worth. We all have limited resources, so we should use our capital carefully to create future benefits, rather than over-gear ourselves for current enjoyment.

Renting is not something that is to be frowned upon, neither is home ownership always something to be admired. Being enslaved to a 30/35 year mortgage with absolutely no chance of following one's dreams due to financial commitments doesn't constitute an admirable position, in my humble opinion.

I believe we should live within our means, save up as much as we can, and work towards a happy, stress-free existence. Life is short, spending 30 odd years worrying about debt for the roof over ones head is a very heavy price to pay.

Sincerely yours.; March 03, 2010 5:36 PM
Bum said...: To anonymous 5:36pm -

Yes!.. you have found true understanding !!

Financial freedom is key.

The problem is "face".. many asians need to demonstrate their wealth.
Buying cars, jewelery and large homes is paramount to achieve this image.

As such, many are in debt.

I subscribe to being "debt free"
and I have achieved it at 45 years of age.

Happily married
2 Boys ( 18 + 20 )
1 HDB home
0 car
1 maid
1 investment property
1/2 million S$ in shares
100K in cash
Annual vacation costs of 25K

Best of all: I am unemployed since 2008.

The fresh air is great!; March 04, 2010 9:58 AM
Anonymous said...: To Bum,

I retired at 40+ since 1999.

I enjoy simple lifestyle in Thailand & Singapore!

ha ha; March 05, 2010 1:58 PM