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Renting can have many benefits

In March 2020, marketing manager Liam Pitts was saving hard, making plans to buy his own home. Then the coronavirus pandemic hit. By August 2021 the 28-year-old had moved closer to his family in Warwickshire and was renting a home with an old friend to halve costs. He found a new job which allowed almost total remote working. Suddenly, he realised that his perspective on how to live well had changed.

“Up until the beginning of this year, I was always set on buying and was saving up for a deposit and having chats with mortgage advisers, but this year something changed in me. I was seeing how I can be anywhere, I don’t need to be tied down,” he says.

“It just means I can be wherever I want to be. I’ve debated whether it means I can move to Spain and work from there. There’s so many possibilities.”

Pitts is one of a new generation of millennial renters who, rather than resenting the difficulty of buying a home, are embracing a life without the financial baggage of a mortgage. He has now abandoned any plans to buy a property and sees only benefits in remaining a long-term renter.

“There’s no long-term tie-in, there’s no pressure,” he explains. “When we moved in, one of the plugs wasn’t working – you just get on the phone and someone will come round and it’s sorted. It’s not my worry, it’s just figured out behind the scenes.”

With home ownership, he says, there are lots of hidden costs because “all the focus is on the initial deposit”. In contrast, with renting, “you have your monthly rent and your bills and that’s it, you know exactly what’s going out and you can plan around that”.

Many millennials feel deeply frustrated that the housing crisis caused by a shortage of homes means they have no choice but to rent because property has become unaffordable (Photo: Christopher Furlong/Getty)

Younger people are now less likely to own their own home than at any time in the recent past, according to the latest Office for National Statistics (ONS) study into home ownership trends, which uses figures from 2017.

Half of people in their mid-thirties to mid-forties held a mortgage in 2017, compared with two-thirds 20 years earlier. People in their mid-thirties to mid-forties are three times more likely to rent than 20 years ago. A third of this age group were renting from a private landlord in 2017, compared with fewer than one in 10 in 1997.

The figures also confirm that only the wealthiest are buying a home these days; at any age, it is less common to own a property with a mortgage than it was 10 or 20 years ago. But not all millennials are being forced out of ownership by circumstance – many are shunning it by choice.

Ravi Davda and his wife became frustrated with the long commute from their house to the workplace every day and rented out their home only to find somewhere else to rent, in a smarter location where they would not have been able to afford to buy.

Since then Davda, 33, who is chief executive of the communications agency Rockstar Marketing, has sold his home after moving with his wife to live in Bulgaria. They won’t be buying again when they return to the UK soon.

“I don’t think this will go down well with some family members, but you have to live life the way you want to,” he says.

“If you find a rented home where you’re happy and pay your rent on time, I don’t see why you can’t treat it as one that’s owned. It’s yours until you stop paying.

“Owning and commitment is overrated and outdated. People want to be free. And people want to have less outgoing expenses than they previously did. The pandemic showed people that they can live on less,” says Davda.

“I didn’t like the fact that the majority of your wealth is tied up, and realistically, as long as you live there, you can’t use it any more. I’d rather invest in other ways, things that are more liquid. If I need the money, I can get it out in 48 hours rather than six months when it comes to property.” He said he sees himself as part of a new movement against the tyranny of owning property.

Renters’ rights

As a tenant in privately rented property, you have the right to:

  • Know who your landlord is
  • Live in a property that is safe and in a good state of repair
  • Be protected from unfair rent and eviction
  • Have your deposit returned when the tenancy ends, and in some circumstances have your deposit protected
  • Challenge excessively high charges
  • Live in the property undisturbed
  • See its energy performance certificate
  • Have a written agreement if you have a fixed-term tenancy of more than three years

‘One of the best decisions I’ve made’

At 38, financial adviser and fintech entrepreneur Claire Walsh, from Cambridge, has owned three properties in her life – a house with her sister, and also a flat and a house with her now ex-husband. “You could say I’ve had my fingers burnt. Both required lots of work and a lot of energy, and selling the flat took ages,” she says.

“Now I choose to rent for flexibility. In five years I’ve lived in a beautiful period flat on Hove seafront, a fantastic flat in the Barbican in London and now a lovely Victorian house in Cambridge. If I’d had to pay stamp duty and agents’ costs, and had the hassle of buying and selling, it wouldn’t have made any sense.”

As a former financial adviser, Walsh says that for many millennials renting can be more cost effective than property ownership. She also predicts house prices will drop in the medium to long term, so there is little incentive for younger people to spend everything they earn just to get a foot on the property ladder.

“I feel much more comfortable having my money in investment funds. Historically, these have outperformed property but also it gives me more flexibility. I can use my investment money to pay my rent and invest in my business. If I tied my money up in a property I would be much more restricted.”

The change in attitudes is sudden. Just five years ago, the Financial Times described millennials as “property mad”, but the pandemic has caused many to re-evaluate what makes a good life.

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Before the pandemic, getting on the property ladder was 37-year-old Jen Kaarlo’s “primary goal”. The writer and journalist from London says at that time she associated her success “as an adult” with her ability to buy her own flat, and was considering any option to achieve that, including the Government’s Help to Buy scheme or buying a rundown property and pouring money into it to make it liveable.

Then, everything changed. Her relationship broke down, she lost her job and her landlord broke the lease on the rented home she had lived in and loved for eight years.

“In between the first and second lockdowns, my life turned upside down. Many parts of my identity started to shift, along with the expectations of what I previously wanted for myself. The pandemic took away a lot of constants in my life during 2020 and I spent way too much time grasping onto my preconceived ideas of stability and success.”

During the dark winter of the third lockdown in early 2021, Kaarlo decided to take advantage of the cheap rental deals she was seeing emerge in central London.

“I craved being in the thick of things when the city decided to started to open up again. Taking this leap of faith was one of the best adult decisions I’ve ever made.

“It taught me to embrace change and explore exciting opportunities that could come my way, even when I least expect it.”

She expected her decision to be met with confusion by friends and family, but found the opposite. “Some of them have even suggested they would rent their home to rent a flat in central London for a year to make up for so much time lost over the last two years.”

‘You want to be free’

As the ONS reports, with more people choosing to rent in midlife it is more likely that they will continue to do so into old age. The problem for long-term tenants like these is that the UK’s legislation to protect private renters is very poor.

This affects the poorest tenants, who would never have had the option to buy, the hardest – but it also makes renting from a private landlord a gamble for anyone. With so many young people refusing to buy, there is growing pressure to improve the rules that landlords operate under.

The shift is also prompting property firms to offer a new kind of tenancy, renting out luxury apartments in UK cities that charge a single rental fee, including bills. These buildings come complete with a concierge service to make solo living as seamless as can be for this new breed of mobile renters.

Emily Tighe, 30, a stylist, lives with her dog in one such apartment owned by Quintain Living in Wembley, north-west London.

“I decided to rent simply because I like to be free. If I had a house here it would be such a huge responsibility. If I wanted to downsize I could move straight away.

“Many people in my industry, my colleagues, feel the same,” says Tighe. “I think because we move around a lot and the jobs could come up anywhere in the main fashion cities in the world, you want to be free to get up and go.”

She is planning to buy a property as an investment, but not to live in. “I’m planning to buy a house and rent it out, to rent to people in similar situations to me,” she says. “But I still want flexibility in my own living arrangements. I want to just pay my rent every month and that’s it.”

For Liam Pitts, what will really make a difference for renters is when attitudes catch up with the choices that millennials are making.

“To me it seems like renting has always been perceived as the worst option, and this is a shift in how it’s presented as an option. There’s a stigma around how renting is bad and the money you spend on it could go towards a deposit. That’s true, but for some people that just isn’t the best option.”

https://inews.co.uk/inews-lifestyle/money/property-and-mortgages/renting-benefits-millennials-reject-home-ownership-mortgages-1393078