There is no such thing as a hidden costs to homeownership. When you own a home, no repair, maintenance nor service is charged to you unless you give someone permission. Your name goes on the bill, the bill gets mailed to your house and then you pay the bill out of your bank account.

Renting, on the other hand, comes with seemingly endless hidden costs. When charges mount, no bill is presented – and no permission is asked. You pay your rent and rent increases blindly, without reason or explanation.

Here’s a taste of just a few of the costs you are paying when you rent.

hidden costs of renting

Landlord’s Profit

Your landlord might be a nice person, but they aren’t renting to you at cost. They hope to earn a nice profit off of your stay in the rental. I’ve heard that a 15 percent profit margin is common. If your landlord has multiple units, profit might be an even larger portion of your rent payment in order to cover vacancies of other units.

Services You Aren’t Using

Are you allowed two parking spaces, but only use one? You get to pay for both. Do you use all the facilities and amenities offered? You should, because whether you use them or not,  your rent covers the costs.

Upgrades and Maintenance to Other Units

Jealous of the recently completed remodel of the unit next door? Perhaps you should be. After all, your rent payments helped pay for your neighbor to get a new kitchen.

This isn’t just true of upgrades, but repairs and maintenance to other units. You are footing the bill for every leaky roof, whether you live under it or not.

Poor Quality of Your Own Unit

I compared my home’s heating bill with a friend renting part of a nearby house. He was shocked to find that he paid substantially more in electric. His apartment had old windows, poor insulation and an inefficient heating unit. As a result, the heat was constantly running. The worst part was, there was nothing he could do to fix it but to move out.

For those that think they are dodging the bullet because utilities are included, you still are subsidizing the unit that uses the most utilities. That’s because at the end of the day, the landlord pays one bill and spreads the costs out to the other units.

Greater Probability of Insurance Loss

At least when you own a home, a house fire is the result of your negligence, your faulty electrical or your bad luck. When you live in an apartment building, it only takes one tenant or business to burn your living space to the ground. How much do you trust your 30 neighbors’ diligence or luck?

Opportunity Costs

Think of everything that you are losing by renting instead of owning. You are subject to paying higher rent from inflation, and at the same time miss out on home appreciation that homeowners benefit from. You don’t get to itemize your taxes, because you don’t get to deduct a portion of your housing costs. You lose interest in letting your landlord hold onto your security deposit indefinitely. Meanwhile, your security deposit loses purchasing value thanks to inflation.


Economists love to use this word, because it’s hard to explain. Basically, an externality is anything that reduces your happiness because of circumstances outside your control.

It could be the midnight bedroom antics of your neighbors. Maybe the fact that you are not  allowed to decorate your apartment the way you want it. Perhaps it’s off street parking that causes you a longer commute or encourages theft.

The possibilities for externalities are nearly endless, and although it’s impossible to put a price tag on them you are definitely paying for them in other ways.

This isn’t to say that everyone is better off owning. I have little doubt that renting can be the best financial choice for either the housing market or lifestyle. It’s important to understand that while homeownership has many costs (perhaps more costs than you are aware of), renting has its own unique costs that are worth considering before becoming a renter for life.