Generation Rent - The growing trend of lifelong renters emerges.
In many European countries renting a home for life is considered normal, with a much smaller percentage of the population choosing to go down the homeowner route. The UK in contrast has always shown a greater desire to invest in property, particularly as a homeowner, but as the size of required deposits increases at a rate not matched by wage growth, what is likely to be the impact on the generation of 20 somethings who are currently considering getting a foot on the property ladder?
According to a recent Halifax report, almost one in five 23-27 year olds say they have little desire to own their own home, which makes for interesting reading for landlords. This change of attitude may be a big opportunity as long term renters provide landlords with more secure ongoing rental income and less necessity for frequent refurbishment in-between tenants. For those who can provide high quality property that appeals to this growing raft of young long term renters, the benefits could be significant.
Laura Fiddes-Baron, Letting Branch Manager at Oulsnam Lettings reflects on what is happening in today’s market.
“Tenant demand has been high for some time but we have definitely noticed a surge since the new year with us letting over 50 properties so far in March already. Tenant demand is definitely out-stripping supply and our investor landlords simply cannot keep up with these kinds of numbers. There is a definite feel of confidence within the lettings market with us speaking to new investors daily who are looking to expand their portfolio and supply good quality housing to tenants whilst also having a secure and profitable investment. “
This shift has come about in part due to affordability - not necessarily the affordability of monthly repayments, but the size of required deposits for first time buyers. Turning to family members to contribute towards home deposits has become normalised, with Santander stating that 32% of those currently looking to buy a home stating will use a family loan to bridge any funding gap. Increasingly it is also the bank of “Gran and Grandad” who provide this support with 8% of first time buyers relying on them for their deposit. Five years ago, this figure stood at one in forty but this has increased to one in ten, a significant shift in such a short period of time.
For those who cannot turn to families for financial support there may be no choice but to continue renting indefinitely as property prices continue to rise. The knock-on effect of this is that we may start to see a cultural shift towards long term renters, especially in the London and South East where many first-time buyers feel increasing priced out of the market. One thing is clear though and that is demand for rental properties across the country is high and figures suggest this will remain for the foreseeable future.