UK landlords must start to consider security for long term tenants
Britons have long held on to the belief that owning your home is the ultimate goal. But after a decade of house prices rising three times as fast as incomes, followed by a decline in the number of mortgages available after the bust, owning bricks and mortar is no longer a viable option for everyone.
“There is a lot of pressure on Brits to own their own homes, even though in the current market there are numerous barriers to entry, especially for the younger generation,” says Matt Hutchinson, a director of flat and house share website, SpareRoom.co.uk. “Soaring living costs mean it’s a struggle for many households just to keep their heads above water each month, let alone have enough spare cash to put aside towards a deposit”.
An estimated 1.5 million people aged 18 to 30 who are unable to access home ownership or social renting will be pushed into renting privately by 2020, according to new research from the Joseph Rowntree Foundation. Those who don’t qualify for benefits but struggle to save enough money for the colossal deposits that most home loans now require, are coming to terms with the fact that they may be renting for the long haul.
A gloomy prediction for some, but others say this isn’t necessarily a bad thing. What is clear, however, is that if a generation of lifelong tenants is the future, we need to address the severe lack of quality and affordable rental properties available.
“With an ever-decreasing supply of affordable homes, the average age of first-time buyers is now 39 and rising,” says Harry Downes, the managing director of Fizzy Living, a new private rental initiative in London. “Add the difficulties in getting a mortgage and the high deposits required and you can see that young people being excluded from the market is an ever-growing problem.
“Putting in place an affordable, well-run rental sector must be the right solution.”
Elsewhere in Europe sentiment is already far more favourable towards renting and it makes sense that the UK is heading that way too – particularly as young people are starting families much later and are less likely to benefit from the returns from soaring house prices seen by their parents’ generation.
So if renting isn’t such a terrible option long term, how do we address the many problems, from amateur landlords and short leases to rents at record highs, all of which are currently plaguing the industry?
“The difficulty is that Britain is not prepared to be a nation of renters just yet,” says Mr Hutchinson, who cites average leases of just 12 months that offer little for people seeking greater security, as well as an industry that has been over-legislated in an attempt to clear up rogue landlords, most of whom ignore the legislation anyway.
“The solution is to free up the red tape surrounding rental processes and come down harder on rogue landlords,” he says. “We have to make the industry accessible for renters and a viable alternative to buying, not just in the immediate future but over the long term”.
Hoping to offer a solution to one part of the market at least, Fizzy Living yesterday opened its first block of new rented apartments in Canning Town, east London. These homes are targeted at what are dubbed the “Rentysomethings” and will cost from £1,050 a month for a one-bed flat and £1,450 for two-beds.
This is not the cheaper end of renting, but Fizzy Living says it is marketing itself as professionally run student accommodation, to attract young people aged 25 to 35 embarking on their careers. Tenants will be offered furniture and broadband packages, on-site car parking and cycle storage, and crucially, access to a dedicated property manager to sort out issues quickly. The company, which has another site in Epsom, Surrey, is backed by £30m from Thames Valley Housing Association which will manage the flats.
If other housing associations shift their focus to private rentals, they are in a great position to use their history of developing affordable housing to better meet the needs of young people, improving the quality of rented accommodation and forcing private landlords to pull up their socks too.
Landlord Expert has said landlords are already reacting to the increasing need for stable, long-term tenancies, saying this week that over half of tenancies now last between two and three years.
However, there is still clearly a lot of work to be done before stable, long-term tenancies are a reality for all tenants. And, realistically, as landlords push for higher rentals from a conveyor belt of short-term tenants, there is little hope of this until the chronic shortage of supply fuelling that fire is addressed.
The Fizzy Living blocks appears to be a step towards that end, not least because a professional housing association, such as Thames Valley, is more accountable than an individual landlord. And with large-scale accommodation devoted to renting, tenants might expect better conditions too.
More importantly, they are less likely to be turfed out of their home at will – as some people experienced this summer when greedy landlords saw an opportunity to cash in on the Olympics. Only 8 per cent of private, rented-sector landlords are full time, which means the rest are using their properties as an investment, or as a second income, which many consider a real concern for an industry growing at such a rate.
But, there are still plenty of opportunities for tenants to help themselves. Not allowing letting agencies to bully them is a good start as many charge excessive fees for organising assured short-hold tenancy agreements (which can be downloaded for free from a variety of online sources) and for credit checks.
Article courtesy of LandlordExpert
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