The phrase ‘An Englishman’s Home is his Castle’ implies home ownership is at the corner stone of British identity. But, as more and more young Britons follow European rental trends, one of the country’s top letting and management agencies, Belvoir, has offered an explanation for why traditions are changing.
Belvoir has been keenly observing this ‘continental shift’ in behaviour and predicts that the UK property market will continue to head towards the European model, where it is normal for tenants, young and old, to rent rather than buy. Mike Goddard, CEO of Belvoir said: “Lives free of commitment have traditionally made young Britons the bedrock of the UK lettings market. However, in recent months we’ve been observing not only an increase in the number of young people renting but a stretching of the boundaries as a growing number of ‘30 somethings‘ opt for renting long term over home-ownership. “Some put this shift towards European trends down to the collapse of the UK housing market but in reality, the collapse merely accelerated a movement which has been happening for some time.”
Belvoir is the UK’s leading lettings specialist and has a network of over 140 franchisees that stretches across the whole of the UK, looking after a property portfolio valued at more than £1 billion. In 2001, Abbey’s annual Rent Vs Buy Index found that by the end of a 25 year mortgage homeowners were on average £135,000 better off than renters over the same period. However, by the time Abbey conducted its 2008 study, homeowners were on average only £5,81(*Abbey’ Rent Vs Buy Index 2008) better off and in some areas it was cheaper to rent – e.g. In London the average rent was £650 compared to an average mortgage repayment of £1,117. “Although there are still big advantages to home owning, the benefits of renting over a long period are becoming more apparent. Growing numbers of consumers are seeing varying mortgage repayments, legal fees, estate agent fees, stamp duty and repair costs as contributing to an uncertain future,” says Mike.
Globalisation and world travel have also played a greater role in young peoples’ lives and as a consequence a greater need for mobility and flexibility is now required. “The economic crisis of Sept 2008 merely compounded this situation. When house prices dropped by as much as 30%, the increased affordability of property was offset by increasing deposits and the cessation of bank lending, which limited the number of first time buyers to the lowest level in modern times,” Mike added.
The flight of migrant workers away from Britain then drove down rental prices – **see Belvoir Lettings Rental Index 2008/09 – as UK landlords faced stiffer competition for tenants. Increased repossessions and rising unemployment combined with lower rental prices have subsequently tempted more young Britons into renting indefinitely. “The current situation indicates that European rental trends are being adopted by a growing number of people across a number of sections in society. This looks set to continue well into 2010 but whether it has caused an irreversible change in British attitudes to renting remains to be seen.” At Belvoir we predict the continental shift will continue and, as it does, we will advise landlords and tenants on the most cost-effective rental solutions,” added Mike.
*The next Abbey ‘Rent Vs Buy’ Index is due to be published in 2010.
** For a copy of the Belvoir Rental Index, please contact Emma Wimpeney on 0161 828 5400
