The forecast for tenants renting
A bit like the weather in the UK, the pandemic has led to unpredictability, with the forecast for the housing and renting market remaining sometimes patchy with the odd sunny spell, but with the third UK lockdown coming to a hopeful end soon, we look towards the future, at what the current landscape of the rental market holds for tenants and how best to navigate these unprecedented times.
Mortgages are not so feasible for some
For some renting is the only feasible way to live, for various reasons, one reason being some just can’t afford the expensive mortgages and deposits in order to get onto the property ladder and millions of people across the UK call the Private Rented Sector (PRS) their home.
Mortgages can, quite often be the largest debt for households and according to the Mortgage Lenders and Administrators Statistics by the Bank of England (BofE) and the Financial Conduct Authority (FCA), the outstanding value of all residential mortgage loans was £1,541.4 billion at the end of 2020 Q4, 2.9% higher than a year earlier, which highlights the substantial amount of debts in the UK for residential mortgage loans and the value of outstanding balances with some arrears increasing by 3.4% over the quarter to £14.3 billion, which now accounts for 0.93% of outstanding mortgage balances.
Can’t turn the clock back
To paint a picture of what the housing market was like, decades ago, according to the finance comparison website finder.com, house prices have increased significantly by 1010% since 1980, which is 24 times the rate at which annual salaries have increased. Inflation rate has sky rocketed by 255% while in stark contrast salaries have only jumped by 43%, therefore meaning inflation has increased 6 times the rate that annual income has. Unfortunately we can’t turn the clocks back, to when house prices were not as much as they are now.
A brief insight into why house prices are so much
The high level of demand in the housing market has had a huge impact on the price of the land. In fact, in the 1950’s three quarters of the rise in UK house prices can be explained by rising land prices, which in turn causes a cycle which then creates prices to remain high, because if land costs a lot, the stakes are higher for developers wanting to acquire it to build on, because the project will cost them more overall and as a result the prices of the homes they build have to be higher in order for the developer to make a profit.
Renting has turned into a plan A for some
With rising house prices soaring and the deposit of a mortgage being unattainable for some, renting has become a plan A option. A report conducted by Paragon, ‘UK Tenant Report’, spoke to nearly 2,000 tenants in the PRS across the country and found that the tenant base is diverse – from young couples finding their first home together to families, to people in later life who may live on their own – but it’s one that sees the benefits of the tenure.
Renting during a pandemic
For the majority of people, the last year has meant that quite a lot of things have just come to a major halt and it almost feels like we are all stuck in a traffic jam, waiting for that red light to turn to green.
The pandemic has changed the way people live and the rental market has seen a change in this, with new rental trends emerging. According to Build to rent operator Quintain Living, some of the latest trends include Insta-worthy interiors and balcony gardens.
One of the top priorities for some tenants is more space, which comes as no surprise as the majority of people are working from home. Having a room for a home office is another definite benefit that people are seeking and another top priority is fast broadband, as more of us work remotely.
Another important factor for renters is the importance of neighbourhoods, as Quintain Living states, ‘Lockdown living has broadened our sense of home beyond our four walls to the community beyond. Localism is a big trend and one that will continue in 2021.’ This makes sense, as with public transport limited, renters will prioritise the immediate surroundings of their homes more than ever. Is there a park nearby? What about a decent supermarket? Are your neighbours nice? All of this will continue to be important in the year ahead. However as the pandemic has hit us all like a ton of bricks, the Marketing Director at Quintain Living says, ‘Despite the uncertainty of 2020, the UK rental market is resilient.
However despite these challenging times, renting can still give you enormous freedom, whether you are moving away from home for the first time or you are a family living in rented accommodation.
What to do if you are struggling to pay your rent
The pandemic has had a devastating impact on people’s lives and has had a knock on impact on employment, which has put some people renting in a difficult position, unable to afford to pay their rent. Whether you are in a 1 bedroom flat, in a single room for rent or flat sharing in London and you can’t afford to pay the rent then Citizens Advice Bureau can help guide you.
You may be able to get benefits or grants to help you with the cost of renting from a private landlord or through a letting agent. You may also be able to get extra money to pay for your rent, through Housing Benefits if you are on a low income with savings below £16,000, which will depend on your circumstances, rent a property and are a UK resident. However if you are already get benefits, you may be able to get extra money. The extra money you could potentially receive does depend on what benefits you’re already claiming.
Deposit protection in the UK
So you’ve decided you want to rent, now what do you have to do? Well it’s important to work out what you’ll need to pay before you move in, so you’ll know if you can afford to rent the property.
One important priority is to save up for a deposit. It’s important to work out what you’ll need to pay before you move in, so you’ll know if you can afford to rent the property.
It is mandatory across the UK to protect tenant deposits, in a government-backed tenancy deposit scheme. Failure to do so can result in financial penalties. Each deposit protection scheme also operates a free and independent dispute resolution service that can be accessed for disputes over the return of deposits.
Below shows a table of the total number and total value of tenancy deposits protected in England in Wales, from March 2008 – March 2020. As you can see in March 2008 only 924,181 deposits were protected, which equates to a value of £885,098,501, whereas when we turn the clocks forward to March 2020, there was 4,141,467 total deposits being protected, with the total value being £4,307,902,071.
To go for an unfurnished place or a furnished place? That is the question
So now you’ve managed to get a deposit to rent a place, the next priority you might be thinking of is whether to go for an unfurnished or furnished place.
A furnished place
So just what are the benefits of renting a furnished place? One it can be less expensive, shelling out for expensive furniture is just another add on to perhaps your growing list of things to purchase on, so it will definitely keep your costs lower. It enables you to have greater flexibility, as renting a fully furnished flat, property, or room can make sense if you’re in between properties or simply just looking for somewhere to stay for work on a short-term basis. Another befit can be that is highly convenient
An unfurnished place
One benefit of renting a place, which is unfurnished, is more personal space, which is a big priority for many renters. So opting for an unfurnished pad, gives you the chance to really make it feel like home.
Another benefit is fewer deposit worries. Let’s be honest, accidents do happen, a spill of your favourite coffee drink on the couch or if you manage to unintentionally break a shelf on the wall. If you do inadvertently happen to be in the unfortunate position of having an accident, then you could be liable to replace it in a furnished place or run the risk of losing your deposit. So opting for an unfurnished place could save you some much-needed cash and the worry too.
Let’s hope the forecast for renting this year is going to be sunnier
The forecast for renting remains reasonably resilient this year, despite these unprecedented times. We’ve been the through a storm and now we are heading hopefully for calmer days ahead. Of course renting in the pandemic maybe different, but just remember there is help out there, you just have to reach out. If you do need any help, please contact the following organisations, Shelter and Citizens Advice Bureau and as always whether you are looking for a spare room to rent in London or Edinburgh, Ministry of rooms are here to help you.