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Why the tenants are choosing private rented sector

With reports that a quarter of the population will be privately renting by the end of 2021, it is clear that the UK’s Private Rented Sector (PRS) is becoming an increasingly popular alternative to property ownership.

New data from insurers Direct Line for Business only goes to strengthen this argument, with a recent study revealing that 70% of UK renters have no intention of buying a home. The research supported the idea that the UK is moving toward a German Housing Model, where the majority of the population opt to rent, supported by government policy and encouraging attitudes toward long term renting.

In fact, further research shows that more people rent in Britain than almost anywhere else in Europe, with only Denmark, Austria and Germany having a lower percentage of home owners.

The reasons for this are varied but often come down to financial cost. With the average first-time buyer looking at prices double what they were just five years ago, it is understandable that home ownership is slipping through the fingers of younger generations, but interestingly that is not the only reason cited by responders for wanting to stay in the PRS.

The Direct Line for Business study shows that of the 12 million adults who said they don’t intent to buy property 22% said that the financial commitment of buying was a turn off, 9% said that they chose to rent so they could freely travel and 12% didn’t want to be tied to one place. An additional 22% commented that they didn’t want the hassle and cost of maintaining a property and would instead prefer a landlord to hold responsilbity for repairs.

Business manager at Direct Line for Business, Christina Dimitrov, said: “The UK housing market continues to change and we are seeing a major attitudinal shift when it comes to renting. While price is a factor, many people are increasingly comfortable with the flexibility afforded by renting a property rather than jumping into home ownership.”

The transition toward a new model of long-term renting is positive news for the future of the buy-to-let sector, with landlords able to support a growing pool of tenants and renters able to have greater choice in the market.

Source: Property Forum

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Financial pressure on landlords is harming the PRS not improving it!

In a report published 25th June, property expert Kate Faulkner has claimed that while legislation has been introduced to improve the private rented sector (PRS), it is not being properly communicated to landlords, agents and tenants.

Writing in her seventh report funded by the TDS Charitable Foundation, Kate highlights the ever-increasing financial and administrative pressures on landlords and agents due to legislative changes.

Of over 147 new pieces of legislation, covering the sector, more than half have been introduced since buy-to-let mortgages were launched in 1996. While the percentage of homes in the PRS classed as ‘non-decent’ has reduced (47% in 2006 to 28% in 2015), there has been an increase in real terms as the sector has grown (1.2 million in 2006 to 1.3 million) over the same period.

Commenting on the report, Kate said: “Due to the rising costs to good landlords and a scant enforcement of PRS regulations, there is an incentive for some landlords and agents to act outside the law to increase their profit margins.

“The increased costs to landlords of buying a property, then letting it legally and safely, means that in some cases rents have increased beyond the means of some tenants. Reputable landlords and agents are being penalised financially for abiding by the law.

“It can create a vicious cycle and a two-tiered rental market, which the legislation was never intended to create.

“The problem, as I see it, is that bills are introduced on the sector all the time, but aren’t backed with a communications plan or funding for enforcement. As I wrote for a previous TDS Charitable Foundation report; legislation is meaningless without enforcement.

“Myriad legislation can be confusing for tenants and rogue landlords and agents often get away with offering sub-standard homes as tenants don’t know their rights. In reality, tenants hold the power in terms of accepting or rejecting poor or dangerous properties, although where supply is scant, this power disappears.

“I would like to see a more concerted approach to educating tenants on their rights. Nobody could have escaped hearing about the introduction of GDPR, but when rental laws are introduced, affecting millions of people across the country, there doesn’t appear to be the same public awareness campaign.

“That is not to say that legislation introduced has been wrong-headed or ineffectual, but it could have had a greater positive impact on the sector if it were backed with enforcement and communication.”

The TDS Charitable Foundation commissioned Kate Faulkner to produce research reports into the PRS to improve knowledge and educate landlords, agents and tenants, in line with the Foundation’s aims. Her latest report, What are the real legal requirements and costs of letting a property, and how can we communicate them better to landlords and tenants? Is now available to download as a PDF.

While the TDS Charitable Foundation funds the reports, Kate retains editorial control and the opinions expressed in the report do not necessarily reflect the views of Tenancy Deposit Scheme (TDS) or the TDS Charitable Foundation.

Source: Property118