Why do tenants rent?
Private landlords are enjoying a boom with more people looking to rent. The private sector is definitely on the up. This is great news for landlords up and down the country. But why's it happening?
For private landlords, it's important to understand not only why tenants rent but also why they choose where to rent. Landlords who understand the needs of renters are better placed to find tenants.
Who is looking to rent?
Young people unable to get on the property ladder are an obvious group of would-be tenants. But increasing numbers of people in all age groups are renting rather than buying. For example, there are now record numbers of people over the age of 50 in private rental properties.
There are different reasons why people rent. It isn't always simply a matter of being unable to afford a deposit and mortgage.
People chose to rent for a variety of reasons. Not just economic ones. However, it is fair to say the main reason why tenants rent is the high cost of owning their own home.
The economic factor
The cost of buying a house can affect all ages. Not just the young. Renting is a much more affordable option.
The average house price in the UK is difficult to pinpoint with reports tending to disagree. However, what they do agree on is that the figure is north of £200,000. A typical deposit will be between 5% and 10%, whilst 20% is desirable, which is a serious chunk of change for anyone to find.
Contrast that with renting a home. Most landlords will ask for a month's rent in advance plus the first month's rent and a security deposit equal to a month's rent. Finding three months rent compared to a mortgage deposit is a much more affordable option for anyone.
Young people unable to get on the property ladder
We've already mentioned this. But there has recently been a spate of news stories about young people 'condemned' to a life of renting. And there is no disputing the fact that with spiralling house prices many young people find it difficult to save for a deposit. So in the case of many young adults, they don't have a choice when they are looking to set up home. They have to look at the private rental sector.
But there are other reasons why people of all ages chose to rent rather than buy a home.
People for a number of reasons enjoy the flexibility of being able to move. Renting is ideal for this. Selling a house and buying one in another area can be a long drawn out process. But renters are able to move frequently and easily.
Despite concerns over student debt the numbers of young people entering higher education continue to increase. These students need somewhere to live. Private landlords in the HMO sector will continue to see high demand for their properties.
People need jobs and they will go where the jobs are. For those finding jobs away from their own towns renting a home is essential. Someone changing jobs may only have a month's notice period to find a home near their new place of employment. In this case, renting a property on a short term let is the ideal solution. They may already be renters or a homeowner who hasn't had time to sell their current property and find somewhere new in their new location.
This is an interesting if a small group of renters. An accidental landlord is someone who rents out their property having had no intention to do so. It happens because a homeowner is looking to move but can't sell their current home. They may be downsizing because the family has grown up or they may need to move for work. But they can't sell their property.
This could be for a number of reasons. Maybe they are in negative equity or the market is flat. Maybe they are being unrealistic in their selling price or can't afford another mortgage. Whatever the reason they become a landlord while being a tenant themselves.
Try before you buy
Someone moving to a new town or area isn't always sure if they wish to settle there. Renting a property on a short-term lease will give the tenant a feel for the area before she decides to buy a house there. Or not.
Where will you be in five years time?
Some of us are lucky to hold down secure jobs or know exactly the path we are going to take. But some people may not like the commitment of taking on a mortgage for 25 years when they don't know where they will be in a job, financial and location sense in the next five years. In these cases, it makes much more sense to rent rather than buy.
Remote workers now fill many job roles which were traditionally office based. This allows the employee much more flexibility with where they are able to live. For example, a tenant may be renting an apartment in London where she works. But if her role changes and she becomes a remote worker she could look for a rental property in the Midlands. It will be cheaper than renting in London and she could still commute to the office when required.
So there are many reasons why tenants rent. And it's not always down to cost as many presume. But one thing is certain. For whatever reason, private landlords are seeing unprecedented demand for their properties.
As a leading online letting agent, we'll help you find tenants you can rely on, quickly. Simply list your property with us today.