The lack of availbale housing to buy, low levels of council housing and high property prices are sparking what is being called a “housing crisis”, (a very serious sounding thing!) but are we really losing out by not buying a property? Maybe renting is the way forward... other countries that think so are no worse off.
Lets think about the realities...
In a fast paced digital age when travel is easy and cheap, technology allows you to work from almost anywhere and being tied down is an increasingly unattractive option, the idea of buying a house seems a little bit…dare I say, old fashioned?
Saving to buy a house is now less like a right of passage as it was in our grandparents age, exciting new step (our parents age) or an awe inspiring mission (in years of late), and much more like a conservative plan of action.
The private rented sector has grown enormously in recent years and accounts for approximately 16.5% of all households, or nearly 3.8 million homes in England (Gov.uk). The rule of Generation Rent is here and things are changing quickly. Only now is the rental market beginning to catch up with the modern world. Agents dominating the market led to unsatisfied renters and owners as high management costs took profits from landlords, who in turn raise rents to try and account for high percentage fees. Renters were forced to accept paying large chunks of money to agencies as there wasn't another secure way to find property.
Now you can rent a property in a completely new way, with sites that let owners manage their properties easily for free, whilst allowing renters to browse and rent property securely - reading the references of the property owners as well as the specs of the property.
The reason this is happening is because of generation rent (the modern day renters) and the advent of the Sharing Economy. Being online and social has made anyone who isn't in that sphere much less powerful. Now it's the renters that get to dictate what they need from the way they rent their property and the market has begun to listen.
Renting allows you to be flexible. Not gymnastics flexible, but maybe the more important kind, life flexible! You get the variety of being able to live in all kinds of houses in all sorts of areas. Don’t like your neighbours, longing to do some long term travel abroad, going to work overseas or maybe just want a change of scenery? Well that’s no problem because you can simply move once your contract comes to its end.
You're also free from the long term financial commitment of a mortgage and the responsibilities that come with it, you're the cliche of footloose and fancy free, the world is your oyster!
As a renter, you can live in an area where you could never afford to buy a property. Being in the centre of the city with bars, shops, work and entertainment close by is usually preferable to living an hour outside the city. Not having to commute saves time and can add to quality of life.
You're also free from paying maintenance costs towards your house (unless you’re extremely clumsy). If the boiler breaks or the roof tiles blow off then the owner pays to have it fixed.
It's more common to go to university, careers are started later and we don’t begin saving seriously till we’re a lot older. Maybe you want to spend money on traveling, going out, activities and experiences whilst their young? Meeting new people, networking and spreading the proverbial wings is something people want to do before they settle down and buying a house just doesn’t fit in with that.
It's way less common to get married in your mid-twenties these days. Couples like to experience living with each other before diving in the deep end and buying a property together. It's much more acceptable for people to be "living in sin" (living with a partner they aren't married to, goodness gracious!) than it was in our Grandparents or even Parents age, so no need to rush.
Rise and falls in the property market won't affect you much either. Many people sold their homes for less than the price they bought them in the aftermath of the recent crash, even cities with very high house prices like London were affected. Rushing to buy because you assume you’re going to make a return on your investment when you sell, isn’t always the best decision.
Why do other European counties like Germany have more renters?
In 2010, the Chartered Institute of Housing forecast that by 2020 a fifth of homes would be privately rented. This figure seems conservative when you look at the renting rates in the rest of Europe.
In German cities, it’s rare to see estate agent windows, whilst in the property-obsessed UK they’re on every corner, and more! This is despite the fact that German house prices are actually lower in real terms than they were in 1970. According to the Organisation for Economic Co-operation and Development, house prices increased by an average of 83% between 1970-2008 in OECD countries.
In Germany, they fell 17% (stats from 2011) and house prices in Germany (although rising slightly in 2014, relative to long term averages) are still way outside of the boom and bust American and UK market prices. In 2011 just 45% of homes in Germany were owner-occupied, compared to 70% in the UK, according to figures from Nomura.
It’s much harder to borrow money in Germany and many other European countries, people are also more reluctant to borrow. Germans are wary of fluctuating house prices like we’ve seen in countries like Ireland, America, Spain and the UK, making them less eager to jump on what they see as a rickety property ladder.
Renting is more secure there, with more laws protecting both owners and renters, erring favour on the side of renters, making their position strong. People also tend to stay in properties much longer, treating them just the same as if it was home they owned (you can decorate properties with no questions as long as you re-paint in neutral colours before you leave).
Around 36% of people rent their property in France and laws there are also heavily on the side of the renter. Renters even get first choice to buy if their owner decides to take their property to market.
Maybe we’re seeing a changing of attitudes in the UK. Despite our obsession with owning property, is it time to take a step back and reconsider what renting can offer?