A new study on behalf of the HomeOwners Alliance and BLP Insurance has revealed that a majority of people renting in the UK believe they will never be able to afford a home, although they would like to buy their own place.
This is compounded by almost 4 in 10 of those who do rent are stuck in cold, damp properties with landlords unwilling to do basic repairs and maintenance.
The crisis amongst renters in the UK the is highlighted in a new YouGov survey which found that 77% of the 4.5 million households renting their homes in the UK would like to own their own home – that is 3.5 million aspiring property owners. But 2 million of them (59%) think they will never be able to.
The survey of more than 2,000 UK adults found those renting also face problems including living in poor quality properties (35%); having a limited choice of rental properties (32%) and concern their property does not meet safety/ fire standards (20%).
The research conducted ahead of this month’s ban on rip-off letting agent fees found almost half of renters (48%) supported and end to upfront charges eg for inventories and reference checks.
Meanwhile, more than a third said they would like: to be able to rent from a responsible housing provider (40%); to see high quality safety and energy efficiency standards in their homes (38%) and to have the option of a longer tenancy (35%).
Paula Higgins, chief executive of the HomeOwners Alliance said, “We have a crisis on our hands. A majority living in rented accommodation desperately want to buy a home of their own – yet most think this is a pipe dream. This shouldn’t be the case in the fifth strongest economy in the world.
Not only that, but it is disgraceful that such high numbers of people living in rented accommodation are putting up with damp, cold properties and reluctant landlords who do not maintain their homes to the required standards. It has been incredibly unfair that such high charges have been put on those living in the rental sector and the Home Owners Alliance welcomes this overdue ban.
Help to Buy continues to be a popular scheme despite fundamental leasehold problems, while features offered by Build to Rent developments are also attractive to consumers, including security of tenure. Shared ownership has also lost some of its shine.”
Support for Help to Buy; but not without criticism
Some help is available to assist those who want to buy their first home, such as Help to Buy, where you can buy a home with as little as a 5% deposit. Some two thirds of UK adults and 64% of renters think that the Help to Buy equity loan scheme is a good idea in terms of helping first-time buyers get on the ladder as it addresses the major hurdle of saving a deposit. One in six (17% of UK adults and 15% of renters) think it is a bad idea.
Criticisms of Help to Buy include:
“The problem is the cost of ownership of a home. All these schemes merely continue to support an overinflated property market.”
“Encourages taking on debt you might not be able to afford in the future. Only helps new builds so gives Developers opportunity to profit by increasing prices and discourages first time buyers from purchasing older properties so adverse effect on used property.”
“Prices have been put up because of this without increasing supply. Builders, developers, estate agents are benefitting. It’s a scam.”
“Help to Buy idea is good in principle, but has in practice been abused by developers… house buyers being manipulated into buying leasehold properties. Leaseholds are a money making exercise for developers and those who use Help to Buy are not always in a position to understand the on-going commitments and hassle that leaseholds involve.”
Shared Ownership loses its shine
Some help is available for renters such as Shared Ownership, where you can buy between 35% – 75% of your home and rent the remainder. Less than half of UK adults (49%) and 46% of renters think Shared Ownership sounds like a good idea as an alternative to renting. A third (33% and 32% respectively) think it is a bad idea.
Criticisms of Shared Ownership include:
“It’s very expensive as you have to pay part mortgage part rent yet you are also responsible for all of the upkeep costs as if you owned 100% of the property and this puts it out of the reach of most renters.”
“The tenant is left paying three bills – mortgage for 25% share, rent and for the lease. This is not ideal. The real solution lies in building enough homes to meet needs.”
The cost can be changed at any point, so impossible to really plan finances. Too many variables against the owner to do with costs changed at the whim of not only mortgage company but the company you are renting from. Extortionate cost despite lower deposit and have heard stories about poorly built properties causing problems. I feel it is an excuse for the Government to say it is providing “affordable housing” for most people, when it really isn’t.
Other alternatives to help renters – Build to Rent
We took the opportunity to ask renters what they thought about the features of Build to Rent. This relatively new scheme offers those wishing to rent:
• longer tenancies (three years or more), with break clauses that allow the tenant to end the tenancy with one month’s notice after six months;
• certainty about the rent for the length of the tenancy, including the basis of any increase, which is linked to a formula;
• operates under unified ownership and provide on-site management.
Build to Rent is a small but growing area. There are currently 20,800 completed Build to Rent developments across the UK; the number of developments under construction or planned as of March 2019 is 118,000 (up 30% in the past year) and is expected to double to 200,000 within the next two years according to the British Property Federation. More information about Build to Rent.
A significant proportion of renters feel Build to Rent features would improve the rental experience and address top problems faced by renters.
The features respondents describe as most impactful are:
• 48% no additional up-front fees (for references/ inventory)
• 40% renting directly from responsible company or housing provider (not private landlord/ agent)
• 38% properties with high quality, safety & energy efficiency standards
• 37% more rental properties available/ greater choice
• 36% no eviction of good tenants/ no early lease terminations
• 35% longer tenancy option 3+ years
• 34% no rent deposit
Kim Vernau, chief executive at BLP Insurance said, “With no quick fix to the problems plaguing the housing market, a pragmatic approach that tackles issues from multiple directions is necessary. As potential first-time buyers continue to struggle to gain access to homeownership,it’s vital that real progress is made towards improving rental conditions.
“The continued momentum of the Build to Rent sector is encouraging as it has a crucial role to play, with numerous advantages for tenants, from cheaper access and longer tenancies to far greater accountability on the part of the housing provider, as opposed to private landlords.
“At the same time, freeing up housing stock for young families by incentivising elderly people to downsize from larger family homes remains a persistent challenge. The clear solution is to improve the quantity and quality of purposely built housing available to last-time buyers, which can also cater more appropriately to their needs later in life.”