Good news for private sector landlords as business will continue to boom!
The post war “must be a homeowner” mentality of our parents has been replaced with the more modern paradigm of our neighbours on the Continent, “rent for life”
Whilst our forebears wanted to own property for a sense of security and financial well being, new research shows that now many tenants have come to believe that purchasing a property of their own is, and always will be, out of their financial reach.
The current strong demand for rental property by willing tenants looks set to continue for many years as it seems that people’s mentality and mindset towards home ownership have changed. This is good news for professional landlords who can offer tenants longer term rental agreements in quality rental properties and they can safeguard their rental income by using Rent Guarantee Insurance provided that they pass a full tenant reference.
Research, carried out by a Leeds based letting agent, asked a total of 254 tenants in private rented sector accommodation about their future intentions when it came to purchasing a property of their own, the study revealed:
- 56% of existing PRS tenants surveyed want to buy a property
- 36% of existing PRS tenants surveyed are content renting
- 8% of existing PRS tenants surveyed own a property as well as renting.
Out of the 141 people that said they want to buy a property:
- 52% do not yet have a sufficient deposit
- 28% have not yet decided where they want to buy.
- 7% are holding back because of uncertainty in the housing market.
Almost two thirds of people with no desire to buy property feel this way because they didn’t want the commitment that property ownership brings, they dont want the financial burden of an expensive mortgage and they like having the freedom to relocate at short notice.
Interestingly, 17% of respondents said they could rent a better standard of PRS property, in a better condition in a more upmarket location than what they could realistically afford to buy.
The survey also showed:
- 55% of people who want to buy a property are currently saving for a deposit
- 39% expect to buy in the next five years, providing they can get a mortgage.
- Most people expect to be aged between 26 and 31 when they buy their first property regardless of whether or not they are currently saving for a deposit.
Jonathan Morgan, Managing Director of the letting agency that conducted the research said: “Buying property and discussing property prices is a British tradition so we fully expected the majority of people to tell us that they want to buy their own bricks and mortar. However the fact so many people are perfectly happy renting came as a surprise and shows that views about property ownership are changing. Until recently the private rented sector was predominantly the reserve of students and young professionals but nowadays all types of people are renting homes. The number of households living in the private sector has more than doubled since the mid 1990’s and in the short-term this growth definitely looks set to continue. There’s no doubt that a shortage of mortgage availability is still holding the property market back because more than half of respondents who want to buy their own home are struggling to raise the level of deposit that lenders require. This means that until the mortgage market relaxes its requirements further the private rented sector will continue its rapid growth throughout the UK and this is especially true when you consider that almost half of people who want to buy a property haven’t started saving for a deposit.”