The British Property Federation is just one of the groups advising house hunters to consider rentals as apposed to buying a property, but why?
Andrew Teacher of the British Property Federation has recently told Sky News in an interview that the UK’s fixation with home ownership has led us to the current high volumes of repossessions whereas our European neighbours, the Germans, Dutch and Austrians have historically opted for rentals over purchasing leaving their repossessions at much lower levels in comparison.
In fact, across Europe, on average 37% of a country’s homes are in the rental sector. In Germany, rented accommodation accounts for more than 55% of all households, in Austria it is nearly 49% and in the Netherlands the figure is 45%.
In the UK, only 31% of homes are rentals.
What are the benefits of renting a property as opposed to buying a property in today’s financial crisis? let’s take a look:
- Rent may cost less than mortgage repayments – take a typical 2 bed apartment in Ealing, West London. There are a quite a few apartments to rent in this area for around £1500 pcm. These same apartments are up for sale for £350,000. A typical mortgage on this apartment with a £50,000 deposit at 7% would cost around £2100 pcm, £600 more expensive than renting. If you are like many of the thousands of people struggling financially, this could help your monthly budgeting enormously.
- Choice – with so many Vendors unable to sell their properties, they are opting to become first time landlords. The more properties that come onto the market for rent, the greater choice tenants have which ultimately means more flexibility to negotiate rental rates.
- Security - As long as your rent does not exceed £2083 pcm, and your are not renting off your landlord who lives in the property and you are not a Company renting the property, your tenancy agreement would typically become an Assured Shorthold Tenancy Agreement. This means that, as long as you fulfil your tenant obligations in the agreement, you will have the property for the entire term of the tenancy agreement with no interfering from the Landlord.
- Flexibility – If you were considering buying a property, you may have a deposit already. Put the deposit into a savings account and sit tight until the market starts to level out. Being a First Time Buyer with no house to sell means that you will be an attractive proposition for any seller.
- Hold on to your nest egg – Predictions from many leading economic institutes are saying that house prices will continue to fall in 2009 so if you don’t want to be a part of a declining housing market, put your savings aside and consider renting short term.
Estate Agents in the UK have seen a massive increase in demand over the last 6 months from tenants wanting good quality properties to rent. Your Move Estate Agents recently reported seeing a 45% increase in demand.
Estate agents in Europe say the rental market is one of the few areas of stability in the turbulent property market.
Caroline Theate, director of CIE Immobiliere in Brussels, said: “We are seeing less people buying and more people renting at the moment because people are waiting to see what is going to happen.
“The rental market has been less touched by the financial crisis. People are not looking to rent for a cheaper price, they are renting until they can find something they want to buy.”
