Being a Tenant is Changing
For many and for many years, getting on the property ladder has been a dream shared by the masses. It still is a dream for many, but for some a dream to not be fulfilled.
There are many reasons why someone would want to have their own property and get on the property ladder:
* No more Landlords
* Your own home to do with what you wish
* You gain equity usually in a property, which can be used later, possibly for retirement
* You build up your credit rating as a mortgage loan is for many the largest loan they will ever take out
While there are many positive aspects of owing your own home, there are some other sides that need to be explored and thought of as well as a homeowner:
* You are now responsible for all repairs and maintenance
* If for any reason you cannot pay the mortgage you could have the property repossessed
* You need to qualify for a mortgage and save a deposit
* If property values drop, you could be in a negative equity situation, owing more on a proerty than what it is valued at
* If you move frequently for work, selling your property, and buying another one can take time and be tricky, especially in a “chain” situation
Even looking at the cons of home ownership, the majority of us will still opt to get on the property ladder.
Hurdles to Getting on The Property Ladder
If we want to admit it or not, there are some hurdles thrown in our way in the attempt to grasp the first rung of the property ladder, and one of those is the housing crisis here in the UK.
Many feel there is no crisis, “crisis, what crisis?”.
However, the crisis front has two sides:
* In some areas there are housing shortages
* The cost of properties
* Getting a mortgage and saving up a deposit
In some parts of the country, there is a shortage of affordable housing, and this is in the rental markets as well. You can be on waiting lists for Council housing, or Housing Associations properties for years.
Currently property sales are down, in part many say due to the Brexit. Buyers are on hold at the moment, which causes a “supply and demand” issue to crop up.
Sellers are selling, but buyers are not buying, so sellers reduce their prices.
Then there is the issue of saving for a deposit, which if 10% or 20% of the sale price of a property, can easily be £20,000, more or less
Being able to afford and repay a mortgage loan is one thing, saving £20,000 is another.
However, even with these hurdles, the powers that be are looking to continue supporting the dream of being a homeowner:
* There are areas where new and affordable houses are being built
* Sellers are reducing their prices to entice more buyers
* Mortgage lenders are developing new mortgage products that require little or no deposit to aid buyers in getting a mortgage
These “hurdles” are being addressed and dealt with by Councils, builders, developers, banks, mortgage lenders, all in the hope of keeping us buying properties, which keeps them all in business.
However, there is one aspect of the home ownership, and getting on the property ladder all these “powers that be”, have not taken into consideration…..and that is us. Us as buyers, consumers, we are changing, and for many, being a tenant is fine.
Digression: The Future of Cars and Driving
In the past, getting your drivers licence and buying a car was a rite of passage. We could not wait for the day.
Then just as with home buying, some hurdles were tossed in the way of having your own set of wheels, and not waiting for the bus or train all day.
* Insurance costs rising
* Maintenance costs and not being able to do your own repairs
* Congestion charges
* Parking fees
The cost of insurance alone is prohibitive for many drivers in trying to own their own cars.
Now if you toss into the mix, taxis and apps to hail taxies, and now self-driving autonomous cars, in the future we may not need to own a car.
Car ownership may go by way of the Dodo.
Why buy a car and have all that expense, when you can:
* Tap an app for a tax
* Self-driving cars to pick you up
* Long-term car hire services
You only pay for what you need and use.
This theory could be applied to home ownership.
New Tenant Fees Ruling
In the long and distant past when you wanted to let a place to live, be it a flat or house, you went to an Estate Agent or property management company, or directly to a Landlord, and applied to let the property.
You may have been asked/required, to pay an application fee, a credit check fee, an approval fee, a moving in fee, an admin fee, a fee for this, a fee for that, and a fee just to pay a fee.
It sounds far fetched, and I am joking to a degree, but there are a lot of fees, many unnecessary, that we as tenants have paid over the years, just to try and let a place to live.
You could spend hundreds of pounds and not get the place to let, and not get a refund of any money paid.
Many of the current fees charged to new tenants, or potential tenants are to be banned.
This changes tenancy here in the UK.
In the past it was almost as easy to save for a deposit on a property, as it was to pay the fees to rent a place, in addition to the four (4) or six (6) weeks rent required as a deposit.
As Tenants We Are Changing
Just as the future of driving and car ownership is changing, so is the future of home ownership, and us as tenants.
Many view being a tenant and renting not a bad thing, the perspective is one of liberation, and not being tied down to one property.
Some changes we are seeing and may see more of are:
* Broadband speed being an important consideration of where we live
* We are moving around more for work and our careers, so renting makes moving easy
* Location, location, location, will become more important as we won’t be owning a car and driving, we will want close and good public transport links
* Tenants will vet Landlords in a way similar to how Landlords vet tenants, we want a good landlord
As to some more changes we are seeing and may see more of, are ways to not have to pay a huge deposit to the landlord, and purpose built “built-to-rent” properties.
Deposit Insurance Schemes: Some landlords, especially for HMO’s/house in multiple occupations, use an insurance programme or scheme to allow tenants to move in with no deposit. No 4-6 weeks rent in advance.
The insurance scheme is where the tenant pays a fee, £100 or more, to an insurer set-up by the landlord or management company. This fee, pays for an insurance policy to cover any damages done by the tenant during their residency at the property.
The fee is a fee, non-refundable, and paid upfront, but it much cheaper than 4-6 weeks rent.
There are also insurance schemes where the tenant pays the premium for the policy monthly, as a part of their rent.
It is a win-win situation for both landlords and tenants, as tenants no longer need to save up for a deposit.
Chief Executive of Upad, a letting agent, James Davis said, “Alternatives to paying one-off deposits are always welcome, and these schemes are a great idea.”
“Immediately, tenants will be free of the struggle of having to raise a deposit for a new rental before they have got their existing deposit back, and those who are unable to raise a deposit at all, or have no means of borrowing the money, could find themselves able to rent a far wider range of properties than they previously could.”
“I am definitely in favour of such schemes and hope in the coming months a greater proportion of landlords will also take this point of view.”
Build-to-Let: These are purpose built flats or houses, that include broadband, utilities, and even a concierge in some instances, included in the rent.
Some may even be furnished, so basically, you just move in.
Many offer no deposit, or may use an insurance scheme to protect the landlord(s), but an easy way to just pack up and move anytime you want.
The future of being a tenant, and tenancy in general is changing, just as is home ownership, driving our cars, how we shop more online, and our lives in general.