Renting a home seems to be becoming more and more commonplace, with many millennials not joining the property ladder at all. But what is actually going on in modern society that is causing this shift, from the desire to be a homeowner, to the lifestyle of a tenant? Read on to find out more…
Incredibly, private sector renting more than doubled between 1980 and 2014, while the number of privately rented properties increased by a whopping 24% between 2006 and 2016. According to Zoopla, 37% of those aged 25 to 34 now own a property; a stark contrast to 2006/07, when the figure was much higher at 57%.
Lettings Director, Michael Clarke, states “the change in attitude towards rented accommodation over the last 20 years has been dramatic.
When I moved into the sector back in 1995, renting was a lot less popular, with many people viewing the cost of rented accommodation as ‘dead money’. Homeownership alone was the way forward.”
Of course, the first response might be that house prices are to blame. “More and more people have looked at renting as a more affordable option, without the financial responsibility that comes with owning a property. For many of them, renting appears the better option, giving them flexibility.” Lettings Director, Michael Clarke.
With various sources indicating that it is cheaper to rent than buy, it would be easy to believe that renting was the best way forward. However, rising evidence suggests the contrary – that renting your home is not necessarily the most cost-effective way to live.
Property Professional Magazine reports that homebuilder Strata found that renting for an entire lifetime will cost £1m more than purchasing your own home, comparing the cost of owning a home in the UK to average monthly rental payments over a 60 year period. Halifax Bank reported similar findings last year. “First-time buyers in the UK are on average £651 a year better off buying their own home compared to those who rent”. Halifax also believes that the initial deposit is often the main barrier preventing potential homeowners in achieving their aim.
According to Zoopla, 35% of first-time buyers from 2016 to 2017 raised the deposit with the help of family and friends, whilst 10% received an inheritance. The deposit is therefore an obvious obstacle to the 55% of first-time buyers who are without the resource of financial aid from friends and family, especially with the average national deposit in 2016/17 being a significant £48,591.
However, when it comes to finding that initial deposit, many are turning to Help to Buy schemes, designed to help ease the financial strain of getting on the property ladder, whilst potentially enabling a higher standard of living than could be expected.
Whilst finance is often the determining factor, there are other aspects to be considered. The choice of whether to rent or buy can, on occasion, be a simple matter of choice, with changing attitudes towards lifestyles and responsibilities playing an additional key factor in the rise of home renting. According to Direct Line, a fifth of British tenants do not want the trouble of maintaining a property, whilst another fifth don’t want to be stuck in the same location.
Our Lettings Director even sees the advantages of renting reflected in the attitudes of his own family. “Both of my nieces rent locally and don’t see home ownership as something they want to do. They would much rather commit to a short 12 month tenancy, rather than a 25 year mortgage. They don’t want to have to pay for something like a boiler repair, when a landlord could do it for them.”
For those of you currently going through this decision making process of whether purchase or to rent, the Money Advice Service provides some helpful guidelines on your finances and other aspects that might impact on the decision.
Statistics suggest that the rise in the rental market will continue to grow at another 2.5% next year, which Michael Clarke forecasts will certainly be the case and more still. “I think this trend will continue as long as there is a good supply of rented accommodation, which I believe is strongly influenced by Government policy, it’s important to support investors in their purchase of good quality properties for the many waiting prospective tenants wanting to rent.”
Whatever your lifestyle choice, we have experienced and knowledgeable experts on hand to help, be that as a homeowner, a landlord or a tenant.
Ash Vale – 01252 353030 | firstname.lastname@example.org
Farnborough – 01252 375999 | email@example.com
Fleet – 01252 812121 | firstname.lastname@example.org
Hook – 01256 764666 | email@example.com
Hartley Wintney – 01252 844015 | firstname.lastname@example.org
Yateley – 01252 597900 | email@example.com
Lettings – 01252 514000 | firstname.lastname@example.org
Property Professional Magazine, 2018