Renting for long term will become a regular occurrence
In the UK property, the standard length of tenancy agreement between alandlord and a tenant for rental homes is six months. However, this is changing, according to a recent report, as both landlords and tenants seek out better deals which offer protection to both sides.
Gary Styles, strategy, risk and economics director at Hometrack, said that although it is the case that these are already starting to rise in popularity, they are likely to become even more prevalent in times to come.
This is a notion which is echoed by the chairman of the National Association of Estate Agents, Mark Hayward. Mr Hayward said that there will be pressure from the market for property to rent for this shift to take place, and that it will be seen more often in the next few years.
He said that we live in the generation of renting, where it has become seen as an acceptable way to live as opposed to a short-term way of living before people move into the housing market for real by buying a house of their own. Mr Hayward added that the security for many families of having a longer tenure secured contractually is becoming more attractive.
"I think that if the private rented sector is ever going to attract significant corporate investment, then those investors are going to have to see longer-term tenancies in place to protect their returns and their investment because at the moment, you could have a void period every six months. Also you have got the security of income servicing that investment. The European model - whether it is Spain, France or Germany - very much supports it.
"Also, if the tenant has got a secured tenancy for a period of time - we are talking years - then they are far more likely to take care of that property and invest in it because they are going to reap the benefits from that investment."
In terms of the general market for rental homes, it was recently reported by Savills that the number of rentals in central London prime property are decreasing, as a greater number of people take the chance to get onto the housing ladder.
However, Mr Hayward said that more people are still renting because of the fact that they just cannot afford to buy a home as they are not meeting criteria for purchasing, or due to the fact they cannot afford the deposit.
While it has been traditional for people who cannot afford to buy a home to simply rent, however, Mr Hayward said that there are also now a growing number who see it as a poor investment because of a lack of growth in prices.
"Why should they make an investment now when there is a danger that the investment might be worth less or certainly no more [in future months]?" he asked.
He added that in the UK currently, somewhere between 12 and 14 per cent of all houses are rented, with estimates from the organisation saying that this number is likely to rise significantly over the next few years, likely topping 20 per cent or even higher by the year 2020.
Posted at 02:07 30/07/2012