In recent times, there have been rumblings of a new type of British resident becoming more and more prevalent – the lifetime renter. As people have started to become more au fait with the benefits of renting, coupled with the fact it has been harder to get a foot on the property ladder, a generation rent has come to the fore.
But is this new style of living here to stay, or is it little more than a short-term trend that’s likely to disappear in the next few years?
Evidence would certainly suggest that generation rent is something that’s going to last the pace. After all, even at a time when it’s become a lot easier to get a mortgage in the last couple of years in particular, fewer people than ever before now own their own property.
According to the latest figures available from the EU, 2005 saw home ownership levels in the UK peak, with more than 70 per cent of all people in the country owning the property that they lived in. However, this has fallen considerably in recent times.
As of 2014, only some 64.7 per cent of people own their own house, and this is a figure that is dropping all the time. It is thought that in the next few months, levels of ownership in the UK will fall lower than in countries like France, which are traditionally rental havens.
If we have fewer owners in the UK than France does at present, it will mean a positive for landlords, of course, with rental demand pushing prices higher and giving them far better yields than they might have enjoyed during periods where the levels of ownership were peaking.
So why do people choose to rent? The reasons are reasonably straightforward. For the mobile young professional, who wants fluidity in their career, the rental market allows them the chance to move at short notice without the hassle of having to find a new home and a buyer for their own. Renting furnished apartments also reduces the amount of baggage they have and gives them far more freedom to live their life.
And it is perhaps rental prices themselves that lend more evidence to the fact that the generation rent trend is something that will last for a number of years. One of the reasons for the early boom in renting in 2010/2011 was that it was more affordable to rent than it was to buy.
However, the demand has sent rental prices higher and higher. In fact, in 2014, rental prices hit an all-time peak when they reached £768 in November. And yet still Brits look to rent rather than buy.
In the year ahead, it is expected that rental prices will continue to rise at pace. In some areas, the cost of renting is expected to accelerate at twice the speed of house prices. This is a strong indicator for landlords that their investment will bring them the returns that they are looking for.
And with people choosing to rent rather than being forced to for financial reasons, rental demand should continue for years to come, which can only be seen as a positive for anyone looking for good investment ideas.
Click here for an article and infographic highlighting some property investment ideas by Experience Invest – well-known property agency based in London, UK.