Should you buy or lease a house?

The Philippines’ housing backlog is estimated to reach 6.8 million units by 2022, according to the House of Representatives’ Congressional Policy and Budget Department last June 2021.  This huge figure does not include the heavily damaged houses brought about by recent calamities. 

While most families are genuinely interested to own a house, many have doubts if they could own one or if they should just continue leasing. In this article, we will highlight the pros and cons of owning and leasing a house or condominium unit.

Why own?

For us Filipinos, to own a house or condo unit is the ultimate goal of our efforts. It is the most coveted physical aspiration for our family and a trophy for all the years of hard work.

Even if the family initially acquires a small house, this investment can be enlarged or expanded over time with improved savings. This flexibility allows a homeowner to individualize the design of the interiors and allow incremental improvements, if needed.  

Many are also willing to invest in a home because the pride of ownership provides security of tenure, especially as the breadwinners become older. With a house or condo unit already acquired, these seniors need not worry despite the eventual loss of salary or income upon retirement.

As real properties appreciate in value and increase in price over time, property owners have the opportunity to profit from and cash-in on their investment, should they desire. For those with extra resources, a house can be a worthy gift to their children or be transferred to their heirs.

Owning a house however, comes with its obligations and responsibilities.  Yearly, the property tax has to be paid.  To ensure that the house or unit does not deteriorate and depreciate very fast, funds have to be allocated for regular maintenance and potential repairs.

Remember, disposing the property can also take time and will be affected by one’s liquidity during a cash crunch.  

Why lease?

Foremost among the reasons to lease a property is the lack of savings or financial capacity.  With funds barely enough to cover one’s expenses, there is no choice but to defer any house purchase. 

Meanwhile, there are people who are just looking for a temporary abode. Due possibly to the distance of their present residence and need to lessen the long travel time to work, some have decided to live in a place closer to their office, in order to attain a life-work-play balance. Given such “temporary” arrangement, lessees can also benefit from this flexibility and opt to transfer to another house or unit after the lease term ends.

Leasing usually costs less than owning a house because there are no financial obligations other than paying rent.  Gone is the expense for the annual property tax.  Moreover, lessees need not worry about repairs and maintenance costs too, since they are usually the responsibilities of their lessors. 

For many entrepreneurs, cash is king and should be principally used to grow the business.  As espoused by Robert Kiyosaki in his 1997 bestseller Rich Dad, Poor Dad – “make money work for you”. Kiyosaki discourages people from putting money into real estate unless it is for investment and can generate income and rent.

Conversely, there are cons to leasing. Amounts spent for rent are considered an expense. Lessees cannot sub-let or make structural modifications on the leased premises unless with the expressed approval of the lessors. 

Ways to acquire your own abode

Many project payment schemes intended to entice buyers to easily and conveniently acquire future abodes are available:

  •  Pre-selling projects can be purchased through the payment of monthly amortization during the house or condo unit’s construction period, with full payment only due upon turn over and acceptance. This simple payment scheme makes it easy for buyers to allocate a small amount monthly over a fixed period.  

Projects not requiring down payment encourage buyers with limited savings to “jump” into buying their dream property while it is still under construction.  It gives buyers time to save up and pay the balance at a later time, or if the funds are inadequate, to secure a bank loan.  While many developers do not ask for a down payment, buyers of high-end and luxury developments are usually asked to make a down payment to reduce the risk of future cancellations.

  • Ready for Occupancy (RFO) projects can be acquired by depositing a small down payment in exchange for early occupancy, with future commitments to pay through a series of monthly amortization before finally being required to pay the full balance. This scheme allows buyers immediate occupancy and eliminates having to spend double for housing, i.e., rent for the current abode and amortization for his dream house.
  • Lease-to-Own (LTO) projects can be considered too. Undecided buyers are given the utmost flexibility since the lease arrangement does not commit any obligation to buy the property.  However, should the buyer subsequently decide to exercise the purchase option, the buyer can get to own the same property after complying with the contract obligations.

By understanding the above benefits of owning over leasing a house or condo unit, it is my hope that most of us will make our purchase early. 


Henry L. Yap is an Architect, Environmental Planner, Real Estate Practitioner and former Professorial Lecturer.