Why do tenants prefer to rent rather than buy?
In the UK owning your own home has always been an aspiration. It's seen as an achievement to buy your own home. But is that an outdated view? Do young people still have the desire to buy their own home? Many no doubt still do aspire to buy a house. But many people of all ages now prefer to rent. Indeed, the private rental sector has never been so strong. This is great news for private landlords of course. But why do some tenants prefer to rent rather than buy?
For many tenants’ finance is why they continue to rent. For two main reasons. They don't want the expense of buying a property. Or they can't afford it.
Many people find it hard to save. Putting money away for the annual holiday or Christmas is challenging enough. But saving for a deposit on a home is a whole different level.
The average cost of a house in the UK is around £367,000. This means a tenant could be looking at around £18,500 for a deposit. This is way beyond many. Especially the younger generation. When a tenant begins to look at the property market and sees the way the figures are stacking up its unsurprising many decide that renting is the way forward for them.
The finance in renting a home is more realistic to the average wage earner. And more affordable. A tenant only needs to find a small deposit in comparison to the money they would need for a mortgage. Saving for a deposit on their own home would mean sacrificing other things.
Some renters undoubtedly make a conscious decision to spend their money on holidays and nice cars along with enjoying a busy social life rather than saving every penny for a deposit it could take years of hard saving to accumulate.
Another thing to consider is the ongoing costs of repairs and maintenance. Renters don't have to worry about this. The landlord will take care of it.
Financial risk also plays a part in many tenants’ decision to remain renters. They see the investment in a mortgage as a risk they don't want to take.
Property is generally a good investment. But it isn't without risk. And some tenants don't want to tie up funds in what they may see as a volatile housing market. Not all property investments are safe ones. But there is also the risk of the long-term commitment which comes with buying a home. The future is uncertain for many of us. Who knows what the economy or employment situation will be next year. Never mind trying to forecast the finances over the life of a 25-year mortgage.
But money isn't the only reason some tenants prefer to rent.
Owning a property can tie a person down. But renting provides people with the flexibility which owning a property stifles. A tenant can choose to regularly move around. Every six months or so if they choose. This suits the lifestyle of people who like to travel or whose work requires them to move around the country. Or those who simply like a change of scenery. Short-term tenancies give people the option to move without the time, hassle and expense of selling a property.
We've touched on this earlier. Many tenants would buy a property if they could. But, despite political sound bites, there is still a shortage of affordable housing in the UK. Many tenants rent out of necessity. Their personal circumstances dictate they’re unable to afford a deposit. They’ll have to continue renting while they save for a deposit. A process which could take many years. Similarly, other tenants may not have the credit worthiness to obtain a mortgage. These folks too will have to continue renting until they are able to repair their credit rating.
What’s clear is that for whatever reason many tenants will choose to remain renters. This is why the private rental sector in the UK is still buoyant and will remain so.
Private landlords can find tenants fast by listing their property with MakeUrMove the online letting platform bringing landlords and tenants together.