Our property expert, Raj Naphray, gives his thoughts on the current housing market.
Renting property rather than buying is becoming the norm, which is just one of the reasons why my lettings agency, Choice Lets, has just expanded into new offices in Hillary Street, Walsall.
It was recently claimed that within twenty years the majority of UK homes will be rented rather than owner-occupied. A report, by the Intermediary Mortgage Lenders Association, said that by 2032 tenants will outnumber owner-occupiers for the first time since the early seventies, with just 49.2 per cent of householders owning their own property.
We shouldn’t be surprised by these findings. I’ll admit to having a vested interest – after all, I’m a landlord as well as a property agent dealing in the rental market– but I often wonder how many people buy a house when they might be better off renting.
There’s no doubt that buying your council house in the eighties was an attractive proposition. The discounts on offer meant that a mortgage was often less than half the previous rent so no wonder people cashed in. However, these days buying a property usually means having to pay the full market value. With house prices rising again, taking on a mortgage can be an insurmountable obstacle for many.
There are several advantages to renting. For a start, the demands of a rental property are much more flexible, particularly when people often have uncertain employment prospects. Short-term and zero hours contracts can see circumstances changing with little notice, which means getting a mortgage can be difficult and paying it should the worst happen becomes almost impossible. I find this a particular scenario in my own home town, Walsall, which is also where I do much of my business. Many prospective tenants come to me because their work situation means they don’t want to commit to buying their own home.
Even if you’re employed and think you’re in a stable position, re-location can mean having to move to a different part of the country, with all the inconvenience and expense that can entail. Renting ensures that you can move at short notice and find new accommodation without having to go through the lengthy process of buying, paying out professional fees and stamp duty, putting your own property on the market and hoping it’ll sell… That’s without taking into account the cost of maintaining your own home. Last winter showed a lot of us just how weatherproof our house is, and life could have been a lot easier had someone else been paying for the repairs.
Of course, renting isn’t always the best solution. Many people will always want to own their own property as a safeguard for the future as well as for its investment value. But there are also situations when renting makes sense, and not always when you’re first starting out on your own. A recently-retired couple I know sold their house, downsized into a very nice rented flat and intend to, as they put it, “spend the money doing all the things we couldn’t afford while we were paying the mortgage.”
Raj Naphray, Director of Choice Lets, Walsall – www.choicelets-online.co.uk