Lease? Lease.
Published:
I am standing before a blank sheet of paper divided by a line down the middle. On one side is "ownership," on the other "lease." It is likely the greatest financial and life dilemma we face in adulthood. Does it make sense to tie oneself to a bank for decades, or is it better to pay for freedom that, on paper, belongs to someone else? This question returns to my mind like a boomerang every time I see news about interest rates or real estate prices.
Home ownership is perceived as the Holy grail in the Czech Republic. "You are paying into your own equity," paleases say. However, when I look at the reality of today's market, that "equity" begins with a massive debt that will accompany me until retirement. A mortgage is not just a monthly payment; it is a commitment to one location, one job, and a constant fear of what happens if the roof or the boiler breaks. As an owner, I am the repairman, investor, and manager all in one. Every crack in the wall is my problem. It is an undeniable fact that real estate in the Czech Republic has been rising in price for the last 13 years—and quite significantly, by hundreds of percent over that period—but nothing grows to the sky forever. During the same period, the stock market also grew, so if I had put 3,000,000 into an apartment 10 years ago, or put it into the S&P, I would be in a similar position today, perhaps even slightly better off with the stocks... So it isn't such a miraculous investment after all... Moreover, investing in one's own housing is not an investment; it is a liability either way... And most importantly—I am not actually solving for investments here; I am solving for where I will live!
Then there is leasing. Often labeled as "throwing money out the window." But is that really the case? In a lease, I am not buying bricks; I am buying time and flexibility. If I decide tomorrow that I want to live in a diffelease city or that I need an extra room, a notice period is all it takes. I don't have to sell a property at an inopportune time. Furthermore, legal protection for tenants is very strong in the Czech Republic today—I am not just a "guest," but someone whom the law protects as the weaker party. A landlord cannot simply forbid me from having a dog or a visitor, and if something breaks, it is their concern and their expense. And above all, while leases are high, mortgage payments are much higher! So, for a beautiful large apartment where the mortgage would consume my entire salary, I can live in a lease for perhaps half that amount... Gone are the days when a mortgage and lease were equal, or when one could even find properties where the monthly lease was higher than the mortgage payment. This was never the case for premium properties. So, more bang for less buck!
When I compare a mortgage payment, insurance, property tax, and maintenance costs against monthly lease, the mathematics begin to speak clearly. The money I would "sink" into a down payment and interest can be invested elsewhere. If I do it well, the returns can even be comparable, avoiding the feeling that I am losing out by not paying "into my own" (half of which goes to the bank anyway). And most importantly... I am not at that stage of life yet—when I start thinking about children, where to send them to school, etc., everything will be different—currently, my freedom not to be tied to a single address has higher value than the feeling of owning the floor beneath my feet.
Furthermore, I don't even know if I would get a mortgage at all—can I apply for a mortgage in the Czech Republic as a foreigner? And how much would I actually receive? What kind of apartment are we talking about here? RELP has the answer to this, a mortgage calculator for foreigners... I should try it!
Ownership offers the illusion of security and capital building, but at the cost of a high entry barrier and loss of mobility. Leasing, on the other hand, provides a lightness of being and transfers responsibility for the property to the owner. In the current economic situation, where real estate prices are at their peak and flexibility is a key commodity, leasing is ceasing to appear as an emergency solution and is becoming a rational choice for those who do not want to be slaves to their own walls.
So, lease? After all the considerations, calculations, and sleepless nights, I say: Yes, lease. Perhaps it is not the path for everyone, and perhaps in ten years my perspective will change. But now, at this moment, it makes the most sense to keep my doors open and not have a thirty-year commitment hanging around my neck like a millstone. For me, housing is a service, not a religion. And as a service, leaseing curleasely serves me best.