Ways to manage your finances while renting a home

Renting a home is no longer necessarily a short-term arrangement before buying property. High property prices, career mobility and the need for financial flexibility may be influencing many young professionals to postpone homeownership, even as owning a house remains a long-term aspiration.

Knight Frank’s Beyond Bricks: The Pulse of Home Buying 2025 survey found that 80% of respondents preferred owning a home.

However, the timing of a purchase depends on affordability, income stability and individual financial priorities.

Longer rental tenures also make financial planning important. Rising rents can affect the amount available for investments, emergency savings and a future home down payment. A Reuters poll had projected urban rents to rise by 5% to 8% over the following year.

The decision to rent or buy should not be based solely on comparing monthly rent with a home loan EMI. Buying also involves a down payment, stamp duty, registration, maintenance and interest costs, while renting offers greater flexibility and allows individuals to retain capital for other financial goals.

Sarika Shetty, Co-founder and CEO of RentenPe, said, “Renting is no longer a waiting room. For today’s young professionals, it is where their financial future begins to take shape.”

“Renters who understand the true cost of paying rent, including fees and rewards, and who keep clear payment records, build habits and a track record that lenders value later. Protection matters too. A job loss or medical expense can undo months of saving, so renters look for ways to cover rent during eligible disruptions. Simple digital tools for payments, documentation and everyday rental management are also becoming part of how young professionals plan,” she added.

Renters who manage their commitments well and protect their finances early tend to reach the buying stage better prepared.

Against this backdrop, here are some financial considerations for individuals planning to rent for longer:

• Budget for rent escalation: Account for possible annual increases in rent and assess how they could affect monthly savings.
• Maintain an emergency fund: Keep sufficient savings to meet essential expenses, including rent, during job loss or unexpected financial disruptions.
• Build a separate home-buying corpus: Invest towards a future down payment instead of relying on whatever savings remain after monthly expenses.
• Evaluate rent versus buying periodically: Consider the overall cost of homeownership, including loan interest, maintenance and transaction expenses, rather than comparing rent with EMI alone.
• Maintain rental payment records: Preserve rental agreements, receipts and bank statements to document payment history and financial commitments.
• Review rental protection options: Understand coverage, exclusions, waiting periods and claim conditions before opting for products that offer protection against specified rental payment disruptions.

Longer rental tenures do not necessarily mean giving up on homeownership. The focus should be on managing housing expenses while continuing to build savings and financial security.