Is it better to rent a house or buy a house? We’ll talk about the pros and cons that American buyers consider when they face this decision
Lesson summary
Hi there everyone. I’m Jeff and this is Plain English. Here at Plain English, we use stories to help you upgrade your English skills. This is episode number 705 of Plain English. That means the full lesson content is at PlainEnglish.com/705.
Today’s story: renting versus buying. The considerations are a bit different in every country. It all depends on the costs, the culture, the availability, the logistics, and the law, even. In today’s story, I’ll tell you about this big decision that most Americans face at some point in their lives: whether they should rent or buy a home. And as you listen, think about the ways this decision is similar to, or different from, how it is in your country.
In the second half of the episode, I’ll show you the phrasal verb “pay back.” Remember, get the full story, the full lesson, with the transcript, translations, exercises, and more at PlainEnglish.com/705.
Rent or buy? The choice facing Americans when they move
Rent or buy? Most American families with a middle-class income or above will face this decision at some point in their lives. About two-thirds of American households own the home they live in. So long-term renters are very much the exception , not the rule in the United States.
Most families have the choice of owning or renting, but we should recognize that some do not have that option. In this story, we won’t talk about whether a family can own a home or not. We’ll concentrate on the decision to buy or rent in the United States for those who have that option.
One advantage to owning a house is financial . If you buy a home, you’ll get a loan . And part of every monthly loan payment is principal. That means, every month, you pay interest , but you also pay that loan back little by little ; the loan balance goes down and down . At the same time, the value of the home may increase—not always, but most of the time it does.
Buying a home is not always a good financial decision, however. Sometimes home prices or interest rates are just too high. When that happens, it can be a better financial decision to rent.
Here’s another advantage to owning, specifically in the United States: most home loans are 30-year fixed-rate loans . That means the monthly payment to the bank is the same for thirty years. Interest rates can go up—doesn’t matter. There can be a lot of inflation—doesn’t matter. The monthly payment to the bank will be the same for the entire term of the loan.
The most common case is that homeowners’ incomes go up, but their loan payments stay the same. And so every year, they get a little bit more financial flexibility . This is different from many countries, where loans are variable rate , meaning the interest rates, and the payments, can go up and down.
In the U.K., for example, most home loans are fixed for a few years, and then they become variable rate. So when interest rates go up, like they did in 2022 and 2023, homeowners’ monthly payments go up. In the U.S., the payments on existing loans don’t change when interest rates go up.
But rent? Rent can go up every year. And in most places, there’s no limit on how much rent can increase. At the end of a lease , which is usually just a year, a landlord can tell you the rent is going up by 5 percent, 10 percent, 15 percent—there’s no limit. You can negotiate , but you should plan on rent going up every year.
Owning a home gives you a lot more flexibility regarding what you do with the space. If you want to change the colors, change the flooring , drill holes in the wall, change the home’s layout , add a room—whatever you want to do, you can do it.
But while you live in a rented house , you have to follow the rules . You have much less flexibility in modifications . If you don’t like the color of the carpet , that’s too bad. You’re not the owner.
Homeowners are financially responsible for everything. Any improvement they want to make, but also any repair they have to make, is their financial responsibility. Owners have insurance to cover major repairs . If there’s a fire or if a tree falls on the house , insurance covers that . But smaller repairs—appliances , flooring, windows, plumbing , heating and air conditioning —all that stuff comes out of the owner’s pocket .
Not so for renters. Renters can sleep easy. If the roof leaks , if an appliance breaks down , it’s not their problem. The landlord has to fix it. This can be another financial advantage to renting. Many homeowners spend a lot of money on costly repairs , even taking out new loans to pay for them. And that can eat into the financial advantage of ownership.
If you own a home, nobody can tell you to leave. As long as you can pay your loan and your taxes, you have the security of knowing you can live in the same place and you never have to move.
This is important if you have kids in school. In the United States, kids are assigned a public school based on their address. If a family moves—even just a few miles away—the kids might have to switch schools . So a lot of families like the security of knowing they won’t ever have to have to move and their kids can always stay in the same school system.
Contrast that with renting. As a renter, you have a lease—a contract, usually, for a year. The landlord can choose not to renew it. And if they choose not to renew your lease, you’ll have to move.
Here’s another thing that might impact your decision: How long you plan to stay. If you move to a new city for a brand-new job, you’re taking a bit of a risk . How sure are you that you really want to stay there?
Some people move knowing they’ll only stay in their new home for a year or two. If that’s the case, renting is much easier. It’s not as much of a commitment . There’s a lot of friction , and a lot of cost, in buying a house. So if you’re going to stay in a place for, say , less than two years, then renting is usually better.
And then finally, availability . Sometimes you’re pushed into a decision based on what’s available in the place you want to live.
Detached , single-family homes in the suburbs are overwhelmingly offered for sale . If that’s where you want to live, you won’t find a lot of rental options . There are some, but your choices are limited.
By the same token , if you want to live in a luxury building in the center of a city, if you want a lot of amenities , then there might be a lot of rental units available, but not as many offered for sale.
Jeff’s take
Most people rent when they’re young; they buy a house as soon as they can; and they never go back to renting. Some people feel that renting a house or apartment is a step down, like they’re moving backwards in life.
I don’t think that. I think you should do what’s right for you in the moment. I’ve gone back and forth and there are things I like about both.
Financially , it all depends on what home prices are like in comparison to rents. Right now in 2024, in the big cities, the prices are really high, interest rates are really high…so finding a bargain is harder. There’s no shame in renting until prices fall a little, in my opinion.
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