Opinion: Longer term tenancies would make renting more attractive
Published by Max Salsbury for 24dash.com in Housing
Key players move to position private rented sector as tenure of choice to solve housing crisis
Peter Girling, chairman, Girlings Retirement Rentals
Last week the UK’s private rented sector (PRS) came under the spotlight with Darryl Flay, chief executive of Essential Living, an operator of private rental homes in the UK, stating that the PRS is currently “dominated by amateur landlords” and must be improved if rogue operators are to be rooted out. He claimed a "totally new" rental sector needs to be created through investment from large long-term investors.
In the same week a report from law firm Addleshaw Goddard and the British Property Federation (BPF) claimed the UK is “too obsessed” with homeownership and that UK councils need to build more homes for the PRS. We agree. But it is important that these tenancies offer more security than simply a six-month assured shorthold tenancy.
The report highlighted that the PRS will be crucial to the UK’s recovery from the housing crisis and the ‘build to rent’ sector is growing at a time when more rental properties are needed. It also highlighted the government’s £1 billion build to rent fund as an indicator of future growth.
Whilst there are many professional lettings agencies providing excellent services that are regulated by industry bodies such the Association of Residential Lettings Agents (ARLA), The Property Ombudsman Service (TPOS) and the National Approved Letting Scheme (NALS), with Girlings a member of all, there are some rogue landlords giving the industry a bad name.
Our national obsession with homeownership has tended to see renting as second best and this needs to change. With house prices continuing to rise in many areas, homeownership remains out of reach for many people. For many younger people renting is becoming a lifestyle choice, and one which many are actually beginning to happily embrace. They see the freedom and flexibility rental offers, even if it means they do not have the means to create capital.
Last year the Office for National Statistics said homeownership had fallen for the first time in a century. Also according to Experian research released in 2013 some areas of the South-East, including London, Bournemouth and Luton, had seen a more than 10% increase in renters from 2001 to 2011.
The rental market is also changing, and whereas a few years ago it tended to be students and people in their 20s that were the bulk of the renters, now many older people are renting. Analysis by Prudential of ONS census data in December 2013 suggests one in every four (26%) retired households across England and Wales is currently renting their home.
Research by Prudential earlier in 2013 also found that greater numbers of retired people are choosing to step off the property ladder to rent; and one-third of renters are now aged over 41, compared to one-fifth just two years ago. They said that 42% of retired tenants are former homeowners and their main reasons for selling up include paying off debts (40%), boosting retirement income (9%) and helping their children.
Prudential says that 42% of retired tenants are former home owners and their main reasons for selling up include paying off debts (40%), boosting retirement income (9%) and helping their children. Stan Russell, a retirement expert at Prudential, recently said: "Renting in retirement can make financial sense and accessing property wealth to boost retirement income is a genuine solution for many.”
The industry needs to look to the future and offer options such as long term tenancies and professional management services to make renting more attractive. If this happens we believe that the negative mindset some people hold towards renting will begin to change. It has to if the PRS is to be an appropriate alternative to home ownership.
The industry as a whole needs to work together to weed out those that give the rental sector a bad reputation, help change perceptions that renting is less desirable than homeownership, and ensure a highly professional service for all its future tenants, retired or not.