‘Our generation needs to be more pragmatic’
Many millennials face a lifetime of renting: according to the Resolution Foundation one in three will never own their own home. In Europe, the stigma of renting isn’t as strong. Germans are the most comfortable with the idea – just 46 per cent of households own their home, and tenants are protected by a raft of laws. Meanwhile in France, anyone renting an unfurnished property as their main residence is given a minimum threeyear tenancy with an automatic right of renewal after then (and eviction is forbidden in the winter months, a rule called la trêve hivernale).
Last week, Rightmove reported that asking rents in the capital soared by 8.2 per cent in the past year, the highest jump on record. This is partly due to a crunch on landlords that has forced many out of the market, meaning supply is not keeping up with demand.
Despite this, the private rented sector (PRS) in the UK is growing: according to a report by Knight Frank, it’s likely to make up 22 per cent of the housing market by 2023, up from 20.6 per cent today. The report also reveals that renters are getting older, with those aged between 35 to 49 forming the largest proportion.
For some, this isn’t as negative as it sounds. In another Knight Frank survey, 30 per cent of so-called iGens (those aged up to 25) said they were renting because it offered flexibility. Others are forced by circumstance to put down roots in a rented home. Faced with the dual frustrations of affordability and economic uncertainty, longerterm tenancy agreements are becoming more popular with renters seeking security – and also landlords.
Twelve-month tenancies are typical in England and Wales – they currently make up about 80 per cent – but not in the rest of the UK. In Scotland, openended tenancies began operating in 2017 and this is standard practice in Germany, Switzerland, Sweden and the Netherlands.
A bid by the housing minister last summer to introduce a minimum three-year tenancy term was foiled by the Treasury. In the face of a competi
tive rental market, millennials are making the most of it and striking deals to suit them and the landlord.
Until late 2017, Sam Brunero lived with his girlfriend, Lucy Breton, both 25, in a flat owned by a family friend, which was on the market and struggling to find a buyer. Looking to put down some roots, but recognising that neither was in a financial position to buy in central London, the couple decided to rent and signed a three-year lease on one-bedroom flat in South Kensington.
“If you’ve conceded, as I have, that you’re not going to own a place in London any time soon, and you don’t want to commute, this is the option,” says Brunero, a property consultant.
“I want to buy one day but I think our generation needs to be pragmatic. The sort of money required to put down a deposit for a London property would buy something much larger elsewhere. It makes sense therefore to do that and use the money raised through letting it out to pay the rent on something in central London.”
Pooling resources and being comfortable with the idea of renting means the couple can live in a first-class location: the flat lies just a few minutes’ walk from Gloucester Road in South Kensington, and comes with access to a communal garden. As a result of their commitment to living there for three years, as well as decorating the flat, Brunero and Breton negotiated a reduction of approximately 25 per cent off the rental price.
Committing to renting long term is becoming a more popular option. Susan Cohen, of Pastor Real Estate, has noticed a 10 per cent increase in requests for longer-term tenancies, as well as “a return of tenants moving in with their own furniture, indicating a desire to make the property feel more like home”.
In the past 12 months, Daniel Fox, of Knight Frank, has noticed an increase of 20 per cent in tenants signing longer tenancies. “It’s definitely a trend that we’re seeing across the board. From one-bedroom flats to five-bedroom houses, people want more security.”
It comes with benefits for both sides, he explains. Not only can tenants negotiate a reduction in rent, they can introduce stipulations on decorating that a landlord is more likely to agree to if they know they are reducing their exposure to void periods.
Furthermore, with the tenant fee ban coming in on June 1, Fox thinks that it will motivate more landlords to look favourably on longer-term tenancies, avoiding having to pick up the costs of changeovers that currently are met by the tenants themselves.
This trend isn’t limited to the PRS sector, either. Rajesh Shah, of build-torent developer Tipi, says that more than 40 per cent of their tenants have opted for tenancies that last between 18 and 36 months.
It “gives them security and comfort in the knowledge that they can plan ahead,” he says. “Those who are thinking about starting families want to know what they’ll pay for the next three years.”
Sam Brunero and Lucy Breton in their rented flat in South Kensington, London, main
Flats at Tipi in Wembley, below and above, have long tenancy options