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Property comment: Renting is the new owning

Wednesday, 6 April 2011 9:30 AM

Serial renter and property expert Saf Ali believes this will be the decade of the 'rental revolution'. Here's why.

With mortgage-lending is at its lowest in ten years and the average deposit costing almost three times as much as the average person’s salary, it's no surprise that there has been a shift away from buying and a steep rise in lettings all around the country.

Call for rental property is at an all-time high, with demand outstripping supply. This is great news for buy-to-let investors who are able to command higher rents – the UK has seen a 15 per cent rise during the last year alone – and a new, additional demographic of tenant is beginning to emerge.

Tenants are no longer just students and young professionals; apartments are becoming family homes, too. This means that the lettings market will eventually fall more into line with Europe – that is to say, leases will move away from the six-month British norm and move towards the five-year European standard.

The increasingly unaffordable nature of homes for first-time buyers is largely responsible for this sudden trend for renting. With the average deposit being close to £70,000 and the average salary just £25,000, potential buyers have a large obstacle to overcome when it comes to buying; they can no longer afford to buy unless they have years of savings behind them (or help from friends and family).

Rentals are therefore the most affordable and practical option. Long gone is the notion that renting is also the most costly route; recent figures have shown that the average person renting in the North-West can save £32,068 compared to a mortgage-payer over a period of 25 years. If that isn’t reason enough, entering the lettings market has many other advantages, too.

In a sluggish housing market like today's, renting allows a freedom that owning a house doesn’t. If work dictates a move to the other end of the country, renting enables you to do that with an ease that owning doesn’t. The process of selling is long and arduous, so a short-notice work-related move would dictate the need to rent in the new city and/or necessitate you becoming a reluctant landlord.

Other obvious benefits include the lack of maintenance required in a rented property compared to that of owning a house or flat and the ability to live in areas of high demand where properties on the sales market are not only likely to be prohibitively expensive but also a lot more difficult to find.

With lease lengths on the increase, a rented home no longer needs to be a temporary, anonymous place to live. With longer leases, tenants now have the opportunity to make their rental property a home, and the addition of families to the rental market will serve only to intensify this. Although most rental apartments don’t boast enough rooms to house a family, it is looking likely that this is set to change, with developers investing in bigger apartments in line with demand.

The recession has caused a dramatic change in attitude from the way we thought in the 1980s, when owning a home was the ultimate status symbol: with the ease and mobility letting brings, it is no surprise that nowadays, renting is becoming the new buying. This decade is the decade of lets and with demand for rental properties rising – and exceeding supply – prices will soon soar, too. For anyone looking to enter the rental market, now is the perfect time.

Saf Ali

Saf Ali is managing director at letting agent and property management company Key Properties, based in the North-West of England.

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