To rent or not to rent?
Historically, the ambition has been to get on the property ladder as soon as possible, but the constant rise in house prices makes this far easier said than done. The rise in house prices increases the number of people renting, which drives up rental costs, which makes it even more challenging to save for a deposit. It could be seen as a Catch 22 – one that means the national average age of a first-time buyer is now 37.
A recent Cost of Renting report from the Association of Residential Letting Agents (ARLA) revealed that not only will current first-time buyers have spent £52,900 on rent before they ever step foot on the bottom of the property ladder, future first-time buyers can expect to spend over a fifth (22%) more.
David Cox, ARLA managing director, said: “The rising cost of rent in this country is a huge issue, and is preventing tenants from being able to save to buy a home. Our Cost of Renting report reveals that tenants are already spending a significant proportion of their income on rent, and therefore struggling to save any money. However, as house price affordability worsens and interest rates start rising, more pressure will be put on renting with weekly rent likely to rise, so home ownership will remain out of reach for many.”
The numbers would suggest that renting is becoming less of a choice because the barriers to buy are too high – but this ignores the possibility that more people rent because they want to, and may not intend to buy at all. For some, saving for hefty deposits has an undesirable impact on their lifestyle, so they plan to rent long-term instead. We have certainly seen a culture shift towards renting becoming the norm out of choice; renting has increased over the last 5 years and is set to continue for the next 5 – 10 at least.
When you consider that in Germany – one of Europe’s most economically successful countries – long-term renting is standard, we have to ask whether buying a house really is the ultimate ambition for the modern UK generations. Renting gives people far more flexibility to move around and often allows tenants to live in a higher standard of accommodation than if they bought outright.
In our opinion, the UK needs to start considering more flexible rental models. Germany has a very transparent market that offers more property to rent and has a rental index people can check to ensure their rent is fair. The amounts are very carefully controlled and unlimited contracts are standard. Typically, the interior of a rental property is freshly decorated in white before tenants move in and repainted after they’ve left.
We’d love to know your thoughts. Do you intend to buy or would you prefer to rent long-term? Do you think the UK needs an introduction of more flexible rental models? Let us know over on Twitter @Legal4Landlords.