One of the reasons for the imbalances within the housing market lies with the quality of rental properties and the terms on which they can be acquired.
Without a plentiful supply of attractive places to rent, some people are deciding they have no other option than to jump on the property ladder. But for some borrowers, it may be a step too early for them – both financially and emotionally. The move may be more problematic than they had initially anticipated.
There are undoubtedly many people who would be better off spending several years in rental accommodation rather than buying straight away. They may need to spend longer saving up for a larger deposit to secure a better mortgage rate, for example, or they may benefit from the flexibility of renting while they change location due to a development in their career.
However, the rental market – as it currently stands – presents a number of challenges to prospective tenants. One of the biggest they face is the lack of security beyond a typical six-month tenancy agreement, which means those looking to rent can end up moving home two or three times in as many years.
It is a daunting prospect for a family looking to establish themselves as part of a community and find a local school for their children.
There are also other negative aspects of renting, particularly for those on short-term contracts. These include clauses about not being allowed to knock a picture hook into a wall, changing the paint colour or having pets.
By being in a position to paint a daughter’s bedroom pink or to improve the look of a living room, families are more likely to feel settled and will hopefully take greater care of a rental property.
Families are essentially maintaining the property on behalf of a landlord, and dealing with all the responsibilities that go with it, if they feel more at home. So if a leak appears in the bathroom, they may be more eager to get it fixed than if they see the property as just a place to rent for a few months. By allowing tenants to sign a rental agreement that lasts several years, they have longer to put their stamp on the property and make it a place where they want to stay.
If the issue about longer-term rentals can be addressed by the housing market, it will give tenants this opportunity to settle into a property and truly make it a home – and landlords can reap the benefits. Having a tenant who stays put means not having to worry about void periods and the damages caused by different tenants moving in and out of a property. This can produce huge time and financial savings for landlords, who can then devote their energies to other aspects of their property portfolio, such as accounts and new purchases.
However, renting on a long-term basis is not suitable for everyone. Some people will be looking to invest their money as soon as they can into property and buy in the next couple of years. But deciding on a long-term tenancy can certainly be an attractive option for those who feel buying a property is not right for them.
Longer-term rentals are currently overlooked by many landlords and may not be suitable for some, but they should not be ignored as there is huge room for expansion in this sector of the market, which has the potential to pay dividends.
