For many Bangladeshis, owning a home is seen as the ultimate sign of financial success. However, in the face of rising property prices and economic uncertainties, renting might offer a more practical and financially sound alternative for many. Here’s why embracing a life of renting could be a better financial plan for you.

The High Cost of Homeownership

The dream of homeownership in Dhaka is becoming increasingly elusive for many due to rapidly rising property prices. Over the past two decades, land prices in Dhaka have surged by as much as 2,740%, while the cost of flats has increased by over 700%. This steep rise is largely driven by a combination of high demand, scarcity of land, and the rising costs of construction materials, which have seen significant hikes due to global economic factors, including the impact of the Russia-Ukraine war.

Currently, a mid-sized flat (around 1,200 to 1,500 square feet) in Dhaka has seen its price increase from around BDT 85 lakh to BDT 1.20 crore in just the past one and a half years. Additionally, buyers must consider the extra 20% of the flat’s value needed for registration and other related costs, making it even more challenging for the average middle-class family to afford a home.

Given these circumstances, many Bangladeshis are reconsidering whether it makes financial sense to stretch their finances to the breaking point for homeownership. Renting is becoming a more viable option for those who cannot afford the high upfront costs and ongoing expenses associated with owning a property.

For instance, if you were to buy a flat in Dhaka for BDT 2 crore (20 million), you could instead rent a good apartment for many years with that same amount of money. Renting a good 3-bedroom apartment in an upscale area like Gulshan, Dhanmondi, or Bashundhara might cost you around BDT 60,000 per month. By doing some quick math, if you spent BDT 60,000 per month on rent, BDT 2 crore would last you approximately 27 years and 9 months. This assumes no significant increase in rent over time, though typically, rents do increase annually.

Renting could allow you to maintain a comfortable lifestyle without the long-term financial commitment and responsibilities that come with homeownership. Plus, you maintain flexibility, which is particularly valuable in an ever-changing world.

Focusing on Retirement and Emergency Savings

Instead of pouring all your savings into a home, focusing on building a robust emergency fund and contributing to retirement accounts might be a wiser approach. In Bangladesh, where social security systems are not as robust as in some Western countries, having a solid financial safety net is crucial.

By renting, you can allocate more funds toward your retirement. Additionally, building an emergency fund that covers at least six months of living expenses can provide peace of mind and financial stability in times of crisis.

Flexibility in a Changing World

In an unpredictable world, renting offers flexibility that homeownership cannot. The impact of climate change, political instability, or job relocation may necessitate moving to a different area or even a different country. Renting makes this process far easier, allowing you to adapt to life’s changes without the stress of selling a property.

Moreover, with the advent of remote work, more Bangladeshis have the option to live in less expensive areas while maintaining their income. Renting allows you to take advantage of these opportunities without being tied down by a mortgage.

Streamlining Financial Goals

When you remove the pressure of saving for a loan re-payment or maintaining a property, your financial goals become clearer and more focused. Instead of juggling multiple financial priorities, you can streamline your efforts toward building wealth through investments, savings, and retirement funds.

For many, this approach reduces financial stress and allows for more consistent progress toward long-term goals. By not having to worry about the fluctuating real estate market, you can focus on what truly matters—securing your financial future.

The New Bangladeshi Dream

While owning a home was once the hallmark of success, the definition of success is evolving. For the new generation of Bangladeshis, financial independence, flexibility, and security are taking precedence over traditional milestones. Renting for life is no longer seen as a compromise but as a strategic decision that aligns with modern financial realities.

While the dream of homeownership may still hold allure, it’s essential to consider whether it aligns with your financial situation and life goals. For many in Bangladesh, renting offers a practical, flexible, and financially sound alternative that may better serve them in the long run. By focusing on retirement savings, building an emergency fund, and embracing the flexibility of renting, you can create a stable and prosperous future without the burden of homeownership.

Sajjad Mahmud is a contributor to The Present World and Sarakhon