It’s no secret that young people in the UK are struggling to get onto the property ladder, with the age of first-time buyers now at a record high of 33 years.
The UK government has pledged to change this, with Boris Johnson last month announcing plans to turn ‘generation rent’ into ‘generation buy’. Promising the biggest expansion of homeownership since the 1980s, the plan involves introducing state-backed 95% mortgages for first-time buyers, with further details still to be revealed.
However, helping a generation of young people does not simply mean providing a path onto the property ladder.
With the pandemic creating a new desire for flexibility in all areas of our lives, ‘generation rent’ must also become ‘generation rent better’.
Motivated by more than just deposits
With an estimated 4.55 million households privately renting in the UK, it would be misguided to think that all renters’ problems can be simply be solved by making it easier to become a home owner.
In fact, for many this has become a less urgent priority during the pandemic, as people increasingly favour the flexibility of renting.
In one survey, more than a quarter of a million people chose to rent because it suited their lifestyle, while according to Knight Frank, the primary motivation for renting amongst 30% of people under the age of 25 was not wanting to be tied to one location.
But the desire to rent is also not exclusively the domain of younger people. According to Knight Frank, people over the age of 50 were also the most likely group to choose renting because they did not want the responsibilities of home ownership. So, the choice between renting and owning is not simply a question of savings and deposit sums.
However, to create a community of satisfied, long-term renters, with the ability to pursue their chosen lifestyle, more must be done to improve the rental market for tenants.
Flexibility is crucial to achieving this, with less rigid lease terms that recognise how people’s circumstances can change. At Skwire, for example, we provide flexible lease lengths spanning months to years, while tenants have the option to ‘pause’ their lease.
On average, more than 25% of household income is spent on rent, but options amongst rental products are rarely good value for money.
Often renters must choose between new but costly Build to Rent properties or existing stock, which can be poorly maintained. More worryingly, an estimated 14% of private rental properties currently fail safety standards, with a further 25% classed as ‘non-decent’.
Ultimately, renters should not have to become homeowners to live somewhere that suits their lifestyle and feels like a home. Allowing people greater freedom in how they decorate and fit out a property is one way to achieve this – empowering renters to make their own choices about the environment they live in.
This will be increasingly important as remote working during the coronavirus pandemic encourages people to spend more time at home than ever before, and as businesses shift to more hybrid working styles in the long-term.
Technology also plays a significant part in providing attractive rental products – meeting tenants’ expectations for robust connectivity and seamless digital services, such as online communication platforms that can provide a more efficient solution to liaising with landlords and resolving maintenance issues.
For landlords, embracing technology can also help to provide a more responsive and agile service, improving satisfaction, enhancing tenant retention and maximising yields in the long-term.
The future for PRS
While the Prime Minister’s pledge to support renters is encouraging, it is crucial to recognise that ‘generation buy’ is not a solution that suits everyone.
The private rented sector – including landlords and investors – must recognise this, seizing the opportunity to provide the homes we need for ‘generation rent better’. Only then will we have a truly future-proof solution that improves the housing market for all.
*Elisabeth Kohlbach is CEO of Skwire
This post has originally been featured in Property Investor Today.