‘Our gen­er­a­tion needs to be more prag­matic’

The Daily Telegraph - Property - - Front Page -

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

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