Over Two Thirds of British Renters Opting for European Housing Model
Direct Line for Business has revealed in new data analysis that of an estimated 17 million renters in the UK, over two-thirds have chosen not to purchase a property and have opted for long-term renting, the so-called ‘German model’ – European housing model.
The research shows that future generations are more likely to rent than buy, with most people citing affordability and flexibility as the main reasons for opting out of owning property. As an example, the average price paid by a first-time buyer in 2017 was £207,693, 50% higher than the past five years. When looked at over the long-term this is nearly £70,000 (or £1,150 a month).
22% of the survey simply didn’t want the financial commitment that comes with owning a home – a common issue that has arisen alongside the emergence of ‘Generation Rent’.
In terms of flexibility, Direct Line for Business found that 9% of respondents wanted to be free to travel, while 8% didn’t want to be tied to a local area. This also seems to fit in with the growing trend for ‘hands-off’ living, with 22% not wanting the hassle of dealing with property maintenance and preferring a landlord to handle any issues.
Christina Dimitrov, Business Manager at Direct Line for Business believes that “we are seeing a major attitudinal shift when it comes to renting. While price is a factor, many people are increasingly comfortable with the flexibility afforded by renting a property rather than jumping into home ownership.
“Recent legislative changes mean landlords have stringent guidelines to adhere to in order to ensure the health and wellbeing of their tenants. It is important that landlords ensure all of their properties are adequately insured to minimise distress to them and their tenants should something go wrong.”
This idea of a European housing model stems from the fact Britain now has the 4th highest percentage of renters, with only Denmark, Austria and Germany having a higher proportion.
Long-term renting in Germany is particularly popular, with only half of the population owning their own home. German renters in particular benefit from a wealth of government measures that ensure opportunities remain affordable and attractive.
One of the main advantages is the strict rent control laws – landlords in popular areas cannot raise rents more than 10% above the local benchmark. Better security for tenants also makes the idea of ‘permanent’ renting a much more attractive prospect.
As Generation Rent continues to rise, the UK government seems to be pulling in the same direction, implementing tougher regulation in the sector and offering better protection for tenants.
For UK investors and any UK property investment company, this represents a unique opportunity. With more people looking to rent increasing the overall number of potential tenants, the right property investment could be worth its weight in gold, commanding higher rental yields and experiencing increased capital growth.