Attitudes towards homeownership are changing as many tenants appear to be favouring the flexibility that comes with renting, rather than owning, a property. The market may, therefore, be set to emulate the sort of housing model seen in Germany where more people choose to rent rather than buy.
Recent research conducted by insurer Direct Line for Business has found that despite 17 million people renting throughout the UK, 70% of these tenants have no plans to purchase a home in the future.
The housing model
Business manager at Direct Line for Business, Christina Dimitrov said: “The UK housing market continues to change and we are seeing a major attitudinal shift when it comes to renting. While price is a factor, many people are increasingly comfortable with the flexibility afforded by renting a property rather than jumping into homeownership.”
Additional support and tougher regulation in the rental market have been introduced by the government to ensure that tenants are adequately supported. These regulations can make the market seem a more secure option for tenants on a long-term basis. For example, legislative changes to HMO licencing that will be introduced from 1 October 2018.
Read more about HMO changes here.
Why are tenants choosing to remain renters?
The research suggests there are several reasons supporting tenants’ decisions to rent long term, including;
Increase in house prices
Affordability was cited as a major reason for continuing to rent rather than buy. In 2017, the average property price for first-time buyers was over £205,000 more than 50% higher than the five years prior. For many, this increase prices many out of the market, making long-term renting a more realistic prospect.
Many tenants are now seeing renting as a more positive prospect with the increased freedom and flexibility over their lifestyle choices that renting provides. 9% of those surveyed wanted the flexibility to travel while 8% preferred not to be tied to one particular area.
For example, in April the BBC reported that up to a third of millennials ‘face renting their entire life’, as homeownership declines in the current housing model.
Less financial commitment
Mortgage payments and running costs can make homeownership expensive prospect – for a fifth of those surveyed the financial commitment associated with homeownership, separate from property affordability, dissuaded them from purchasing their own home.
Maintaining a home is too expensive
Homeownership can be expensive – more and more tenants state that maintenance on their own home would simply be too expensive. Therefore many prefer to have a landlord or agent to act on their behalf should any issues arise in the property.
How does this compare regionally?
Mortgage Introducer cites that regionally Scotland has the highest proportion of people renting in the UK (43%), whilst the capital, London, has the highest number of renters equating to 2.7 million tenants. In contrast, the West Midlands has the lowest proportion of people renting.
What about demand?
Increased house prices mean that property affordability is a key issue for first-time buyers who do wish to own their own home. Demand for affordable housing is increasing which continues to put pressure on the rental industry going forward.