DON’T ASSUME ‘GENERATION RENT’ ARE ALL VICTIMS
Published 19 August 2016
Many media stories about our housing market focus on how difficult it can be for first-time buyers to buy their own home, and how many are ‘stuck’ in rented accommodation says Jan Hytch, but whilst this may be true for some, it over-simplifies the position of some of those who rent. Yes, many people do aspire to own their own home, but a healthy housing environment should include a balance of owner-occupied and rented accommodation, and in some circumstances renting is a preferred option for people. We certainly shouldn’t assume that everyone who rents their home is in that situation solely because they are unable to buy.
There are some unarguable positives about renting. The cost of your home is fixed for at least a year, with no worries about rising interest rates. You don’t have to worry about maintenance – that is someone else’s problem. You have the flexibility to move on quickly if you want or need to, or to negotiate a longer rental period if you are happy to stay put. And for many people, renting is an affordable way of living in an area they really like in which they simply wouldn’t be able to afford to purchase a property.
Increasingly, we are seeing a European model emerging, where people are buying properties, but not necessarily intending to live in them. For those living and working in expensive areas, the route to property ownership may be through buying a house somewhere else, and renting that out – and then renting somewhere they’d prefer to live themselves.
In a world of labour mobility, the prospect of spending up to ten per cent of the value of your home in legal fees, stamp duty and moving costs every time you move job is an unwelcome one. Far better to rent where you choose to live until you are ready to settle down in one place, and in the meantime get on the property ladder through buying an investment property, either somewhere where property is cheap, or else in a location where you think you will eventually end up wanting to live.
We are beginning to see this happening now with young professionals from Norfolk. Many move to London in their twenties, with exciting job prospects but no chance of finding an affordable home there to buy. So they buy a property in their home city, then rent it out with a view to returning to the city later on in life, perhaps when they start a family.
Are these people victims of ‘Generation Rent’, or are they taking advantage of the property market for their own benefit? If they move to London in their twenties and return at a later stage when their careers have progressed along with their incomes, they will more than likely be able to move into the home that they already own, with only a few years left to run on the mortgage – or else sell and use that equity to upsize to a family-sized home.
It just goes to show that simplistic, headline-friendly phrases like ‘Generation Rent’ can be unhelpful, and hides a much more complex and less doom-laden reality – the housing market is never as simple as it seems.
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