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UK property: Tenants to be offered longer tenancies?

Three-year tenancies are being proposed by the UK government, underlining the continued demand for rental property and the need for greater regulation in the sector.

Summary:

  • The UK government is consulting over the minimum tenancy term in the country
  • Under new proposals, tenants would be able to access three-year tenancy terms, helping people to “put down roots” without worries over short tenancies
  • Not only does it underline the growing reliance on the UK’s rental sector, but also the need for greater reform to provide more professional standards of management

UK tenants could soon be able to live in their rental property with three-year tenancies.

New government proposals aim to give more security to renters, with consultations on minimum tenancy lengths likely to continue until August 2018.

It comes at a time when homeownership rates in the country have fallen to 63% in 2017, compared with 72% 10 years’ previous. Of course, while affordability is preventing many people from making it onto the property ladder, there’s also a rising number of tenants that are turning to the rental sector as their long-term rental solution.

Indeed, research published in June found that 70% of UK tenants have no plans to buy a property in the future.

As a result, the UK government has recognised the importance of improving standards for those living in the country’s rental market. Tax reforms in recent years have been regarded as a means of moving the UK away from its traditional, outdated buy-to-let sector, and to instead focus investment into the purpose-built rental sector.

And these tenancy reforms, the government argues, would help those tenants that want to stay in the same rental property for a longer period of time to feel more settled in their home.

“It is deeply unfair when renters are forced to uproot their lives or find new schools for their children at short notice due to the terms of their rental contract,” argued Communities Secretary James Brokenshire.

“Being able to call your rental property your home is vital to putting down roots and building stronger communities.”

Source: Select Property

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70% of UK tenants have no plans to buy a property

Attitudes towards renting and homeownership in the UK are evolving, with many Britons preferring the freedom and flexibility that renting provides.

Summary:

  • Changing generational attitudes mean that 12 million people in the UK are renting their homes and have no intention of buying them in the future
  • Wanting less financial commitment, the freedom to travel and not wanting to deal with repairs cited as just some of the reasons behind the burgeoning preference to rent
  • As more people look to move into the private rented sector, it places a greater emphasis on investment into providing enough supply to facilitate this demand

The UK is moving towards a ‘German-style housing model’, with future generations forecast to most likely live in rented accommodation.

Research from a new study by insurer Direct Line for Business has found that, out of the 17 million people currently renting in the UK, around 70% (12 million) have no plans to purchase a property in the future.

With the average property price for a first-time buyer in the UK now 50% higher than it was five years ago, naturally affordability is a concern for many renters. However, 22% of those people not looking to buy claim that they simply do not want to be burdened with the financial commitment that comes with owning a home.

Flexibility is a key factor for tenants today, and renting provides tenants with a greater sense of freedom as opposed to owning a property. 9% of the survey said they want to be free to travel, and 8% said they rent so that they’re not tied down to the local area in which they currently reside.

Furthermore, 22% of those not looking to buy added that they believe the cost of maintaining their home would be too expensive, and instead prefer to have a landlord or management team on hand to resolve any maintenance issues on their behalf.

“The UK housing market continues to change and we are seeing a major attitudinal shift when it comes to renting,” said Christina Dimitrov, Business Manager at Direct Line for Business.

“While price is a factor, many people are increasingly comfortable with the flexibility afforded by renting a property, rather than jumping into homeownership.”

These findings follow a report published in April which highlighted that over 40% of millennials in the UK will now rent their entire lives.

As the demand for rental accommodation rises, it will continue to increase the pressure on rental markets in key UK towns and cities. In Manchester, for example, a city with one of the country’s fastest growing rental markets, it’s anticipated that residential housing delivery will meet just 25% of annual demand by 2022.

Source: Select Property