There is no doubt that a trend in favour of long-term renting over owner occupation – the so-called rise of “generation rent” – has developed in the UK over the last few years but the different reasons behind it is not always clear.
We have around 4,500 properties under management across Glasgow and Edinburgh and have surveyed all tenants whose leases ended during February, March, April and May, asking if they were planning to buy their next home.
Of those who responded, only 17 per cent said they were switching to owner occupation.
The remainder said they intended to continue renting – either through trading up to larger accommodation or in some cases trading down due to affordability issues. Others just planned to rent in another location as a result of a change of job or lifestyle.
We have only just started monitoring the future intentions of departing tenants but I would not be surprised if the figures for the next four months, from June until the end of September, showed the same percentage, or even less, moving to owner occupation.
Although not all departing tenants responded to the questionnaire, the sample was large enough to suggest the replies were typical of tenants as a whole.
I believe it is likely that more than 17 per cent of the departing tenants would have liked to become owner-occupiers but like many would-be buyers nowadays are finding deposits or securing a mortgage a problem.
However, the results also confirm an increasing trend whereby even tenants who do qualify for a mortgage and can afford the deposit are actually choosing to continue to rent when the time comes to move on.
There are understandable reasons for the change in attitude and it looks like buying at all costs is being rejected in favour of renting, because of the convenience. Our society is becoming increasingly transient; rental accommodation fits nicely with this and will become even more relevant once the minimum lease period is reduced from the current six months under an act recently passed by the Scottish parliament, although the new regulations are unlikely to come into effect before the end of 2017 at the earliest.
Another provision of the act, restricting the number of ways in which landlords can regain control of their properties, effectively strengthens security of tenure and will therefore enhance the appeal of renting among families or others seeking to rent long term in the same property.
The headlines of “generation rent” usually assume that the reason people remain tenants rather than purchasing property is because they are locked out due to financial constraints, the need for high deposits and the tight lending criteria that needs to be met before a mortgage is secured.
Renting as a lifestyle choice, even when tenants could afford and access funds to buy is a growing phenomenon.
Meanwhile, the company’s Rental Tracker covering the period March to May shows substantial increases in rents for two-bedroom flats over the previous quarter – up 11.8 per cent in Edinburgh and 13.4 per cent in Glasgow, to £990 and £879 per month respectively.
One-bedroomed properties averaged £750 per month in Edinburgh and £605 in Glasgow.
At the other end of the scale, four-bedroomed houses were achieving an average rent of £1,377 in the capital, and £1,310 in Glasgow.
May was one of our best months to date. The general lack of suitable property is still proving an issue and this, combined with the seasonal high, is probably the reason for this.
But with more tenants deciding renting is a long-term lifestyle choice rather than a stopgap, rental values are only likely to increase.
Rob Trotter is associate director at DJ Alexander Lettings.