Forecast for 2007: Homeowners go back to renting

The heyday of home ownership may have peaked … as more people go back to renting their own homes. That's now a better way of managing family finances – says leading UK lettings specialist Belvoir.

"Belvoir Lettings, which has over 90 offices nationwide, predicts that 2007 will see the beginning of a growing shift in attitudes to buying or renting domestic property."

“There used to be a stigma attached to renting your home,” says Belvoir’s Chief Executive, Mike Goddard. “People would see you as a second class citizen who couldn’t afford to buy or didn’t have the ambition to progress in life.

“But not any more. Those sort of judgements are old hat and it’s now more acceptable to rent for a variety of reasons – not least because it’s usually the most cost effective way of living and the most efficient way of managing finances.

“Social change is one big reason. Jobs for life have now gone. People have short-term work contracts and a young professional or mature manager doesn’t know if he’s going to be in the same job in a year’s time.

“So, as they move around the country they rent their home wherever they’re working. It’s more flexible than buying and selling all the time.”

Belvoir gathers information from its network of UK and Northern Ireland offices, which have monitored shifting trends for up to 12 years. In that time the seven per cent of people who once rented has grown by half to more than 10 per cent.

And the pattern, Mike Goddard feels, will become stronger next year with the support of other economic and political factors.

HOUSE PRICES

“The cost of housing is quite high,” he says. “First time buyers find it nearly impossible so they are opting to rent as a more affordable solution. I’m not saying rents will not increase – I think they will - but so will the standard of quality rented homes and the demand for them.

POLITICAL CLIMATE

“The government is also supporting the private sector by creating a favourable climate for renting. Increased regulation will prune out cowboys, on both sides, and, as the value of housing stock rises, good practice will make renting increasingly attractive.”

TENANTS

And not just to the typical young tenant who once dominated the market. Not even to the mobile population of professionals. Another social trend has created tenants from the rising number of older, mid-life divorcees who often chose to rent after splitting the family home.

Mike believes that 2007 will also see changes in where people find their dream properties.

RURAL

“We are already seeing a move towards rural communities – where struggling farmers are realising they can diversify by converting outbuildings for rent. So people who cannot afford to spend up to £400,000 on the country cottage of their dreams, with roses growing over the door, find they can rent it for £800 a month instead of committing to a monthly four-figure mortgage repayment. So having their cake and eating it becomes infinitely cheaper.”

CITY CENTRE

The demand for city centre apartments, however, may be changing. “Renting will continue to thrive in city centres but I doubt that developers have actually researched the continuing demand from tenants,” says Mike. “They’ve over-supplied the market, in some cities, without seeking advice from a specialist lettings agency, such as Belvoir, and on the assumption that the trend is sustainable … and I don’t think it is.”
The rental market in 2007 will continue to be driven by demand, not supply, says Mike Goddard … “it’s just a matter of watching what direction that demand takes.”