A new lease of life?

Estate agent with key

The "golden age of home ownership" is over, says a report by a distinguished housing organisation. But could the British ever learn to love renting?

It is as much a national obsession as football, pets and complaining about the weather.

For millions, the ideal of buying, owning and making a hefty profit from one's own home has gone from a dream to an expectation, and fuelled an insatiable demand for TV property programmes.

But in the post-credit crunch world, reality is slipping behind the fantasy of ever-rising prices and a mortgage for all.

According to a report by the Chartered Institute of Housing, the era of the owner-occupier could be in decline, with millions facing a lifetime as tenants rather than freeholders.

Why I love renting

Louise Northwood and her Co Durham home

Louise Northwood, 31, who runs a dating agency and a recruitment consultancy, leases a seven-bedroom property in County Durham which she shares with her mother and two children.

The rent here is £700 per calendar month - if I took out a mortgage now I'd probably be able to get a two-bedroom house in Durham city for the same monthly repayment.

I like the flexibility - I work from home, and as my businesses have grown I've been able to trade up without the hassle of selling.

Personally, I'd rather invest my time and my money in my businesses - I think the return will be greater.

It's not for everyone but this set-up works very well for me. I'd love to live here for the rest of my life.

It warns that while 100,000 new UK homes are expected to be built in 2010, the number of new households each year for at least the next 11 years is expected to be more than double that.

As a result, the study raises fears for what it calls the "in-betweens" - those typically earning more than £12,000 but less than £25,000, too poor to make it onto the property ladder but too well-off to qualify for social housing.

But could a national consciousness forged in the eras of Right To Buy and Sarah Beeny ever truly be reconciled to paying off a landlord's mortgage rather than one's own?

It may be that millions will have little choice. While owners trapped in negative equity as a result of the crash in prices learn hard lessons about the downs as well as the ups of speculation, an ever-increasing number of young would-be buyers are finding it harder than ever to make their first steps into the market.

According to statistics from the Council of Mortgage Lenders (CML), the average first-time buyer is now putting down a deposit of £35,000.

The estate agency Savills predicts that this high threshold will mean an increase in the percentage of Britons renting privately and a drop in the proportion lucky enough to be owner-occupiers.

By 2020, it forecasts that some 20% of households will be privately rented - up from 15% today and a low of 9% in 1988. By contrast, it predicts that owner-occupied households will make up 62% by the start of the next decade - down from the 2010 figure of 67% and an all-time high of just under 71% in 2003.

UK housing tenure graph

If an era really is coming to an end, it will be a harsh awakening for a country which has come to view owning one's own bricks and mortar almost as an article of faith.

Start Quote

Kirstie Allsopp

Culturally and emotionally, we like to own our own homes”

End Quote Kirstie Allsopp Location, Location, Location presenter

By contrast, Britain's continental neighbours have long approached property tenure very differently. In 2007 just 56% of French and 43% of German households were owner-occupied - thanks in no small part to legal systems which make renting more attractive and secure.

Could the UK now follow their lead? One expert synonymous with the national property obsession - Location, Location, Location presenter Kirstie Allsopp - thinks a rise in the proportion of renters is likely, but is sceptical that their numbers will ever reach continental levels.

She notes that in Germany, tenants have greater security and more freedom to decorate their homes. Moreover, she says, most Britons plan for modest pensions on the understanding that they will have paid off their mortgages before they stop working.

And most of all, she believes, aspiring to be an owner-occupier runs deep in the British psyche.

"Even if renting were more practical here, culturally and emotionally, we like to own our own homes," she says. "I remember how thrilled I was when I first got my own roof over my own head and I think, in general, that people share that.

"However, renting does allow you more in the way of instant gratification and a disposable income in the short term, and I think the culture of sacrifice for home ownership isn't as fashionable as it was."

Of course, renting will always have its advantages, such as fewer hassles, greater flexibility and less exposure to the turbulent property and mortgage markets.

To rent or not to rent

  • Pros: More flexible, no risk of negative equity, landlord pays for repairs
  • Cons: Usually more expensive, properties of lesser quality, can't decorate, never own your home, paying someone else's mortgage, less security

But very different sentiments are expressed by those who desperately want to get on the housing ladder but cannot even reach the lowest rung.

Supporters of the Right to Buy revolution of the 1980s may proclaim that it opened up the prospect of home ownership to millions, but, according to the National Housing Federation, some 4.5 million people are now stuck on waiting lists for social housing.

With council and local authority homes now stigmatised and apparently reserved for the very worst-off, journalist Penny Anderson, author of the Renter Girl blog - in which she covers housing issues as well as her own experiences as a tenant in Glasgow - says the British will begrudge renting privately until they enjoy similar rights to their counterparts in Germany.

"It's very hard to find anything positive about renting in this country," she says.

"It doesn't feel like living in a home - it's insecure, you can't decorate, you can't have pets. You feel like you're living in someone else's piggy bank."

Start Quote

My grandparents didn't think about owning their own place, they just wanted somewhere nice to live”

End Quote Lynsey Hanley Writer

Indeed, for now it appears unlikely that most Britons will voluntarily choose to become long-term renters until the financial and legal status of tenants changes.

A recent survey by the property search website Zoopla suggested that taking out an interest-only mortgage on a home was cheaper than renting in 74% of UK locations - although in areas like Huddersfield, Oldham and Brighton it was more cost-effective to take out a tenancy.

Nonetheless, the country has not always idealised ownership. Writer Lynsey Hanley examined the changing status of social housing in her book Estates: An Intimate History, and points out that the popularity of post-war council homes superseded the property boom of the 1930s which had led to a brief rise in home ownership among better-off working class people.

"This is a weird country," she says. "In some ways we're quite individualistic and in other ways quite socialistic.

"It would take a massive change in people's priorities for renting to become truly popular again - but then again, it's a generational thing. My grandparents didn't think about owning their own place, they just wanted somewhere nice to live."

Perhaps it is simply finding somewhere nice to live which is the real national obsession. Until Britons believe that renting is the best way to achieve that, however, it could be that millions are about to fall short of their aspirations.

Below are a selection of your comments

Ironically, the harder and harder I've worked to save up for a decent deposit, the less and less I feel like blowing it all away on a house. House prices are so out of kilter in the UK that I don't feel there is much value for money for what you get when you look at it objectively. And I no longer see renting as throwing money away, as I feel a similar argument could be said for mortgage interest (which feels to me like renting from the bank). Its an absolute shame that better security of tenure isn't on the cards in this country, makes you wonder if people simply hate tenants. If the can do it in Germany, why not here?

Nikhil Patel, Stevenage

I have rented for the last 10 years and know that unless legislation is bought in to ensure that landlords have to bring their property up to a minimum standard (secure, free from damp, adequate economical heating & insulation etc) then renting in this country will never be an attractive option, it is not our perception of renting but the reality of our poor rental housing stock which makes it the last resort for many Brits.

Emma, Coventry, UK

It is economics that dictate home ownership, not the British psyche. Being an owner-occupier makes sense primarily due to the lack of capital gains tax. If this where removed so home ownership was on a par with any other investment then I doubt we would see the same enthusiasm for being an owner-occupier.

George Whitehouse, Woking, UK

If you're renting, what are you supposed to do when you retire? A pension is never going to be enough to cover the rent. The only way you can be sure of having a roof over your head when you're older is to get a mortgage and make sure it's paid off by the time you stop working.

Nick Daniels, Luton, UK

I'm about to to become a landlord, with my first tenants moving in on Saturday. I take great encouragement from your article as it suggests that I shall be able to rent out my property for a many years to come, and possibly build up my property portfolio which will eventually form my income in my retirement. I was fortunate enough to be an "in-betweener" during the years when mortgages only required a small deposit (typically 5%). I'm glad I had that opportunity and I feel sorry for people whose options are now limited.

Martin Randall, Wakefield

I've always had the belief that renting was dead money so myself and my partner lived at home with parents while we tried to save the massive deposit required by first time buyers. Even with 15% deposit we still couldn't get a mortgage and were feed up of putting our lives on hold. We are now renting a lovely cottage in a village where we could never afford to buy. We are paying more on the rent than we would have on a mortgage for a house in a less desirable area. I would never had considered renting if we had been able to get a mortgage but it seems the best solution now.

Nikki, Bedford, UK

I prefer to rent - I'm single and my DIY skills leave a lot to be desired... But 80s & 90s rents rose faster than mortgage repayments and I couldn't find stable affordable accommodation. I'd return to renting - if I could afford it!

Joel Kosminsky, London, Britain

Renting in the UK is absolutely terrible. You have no security while I was saving up for a deposit for my first home I was lucky if I could stay somewhere for six months before the landlord decided to cash in and I was forced to look for somewhere new. On the continent you can stay for years with controls on rents which allows you to plan ahead. Until the laws are changed in the UK the attitude to home ownership will stay the same.

Dale Thatcher, London, UK

I rent. My landlords are great. My rent is reasonable. I can't afford to save a deposit to buy. I have a dog, and if I asked I've no doubt I could decorate the house should I wish. Why would I want to buy in this market?

Hannah, UK

I'm not really too sure which regions people are talking about, or where they are getting their figures from. I've been renting in Belfast now for 5 years, and as a qualified mortgage advisor i can also confirm that during that time it worked out to be significantly cheaper than even an Interest-only mortgage. Our first house was £450 p/m rent, while the mortgage on the same property would have been an additional £200 per month in 2006. I don't pay for rates, repairs, appliances or building insurance, and if the thought crosses my mind, i can get up and leave with only 1 months notice. No estate agent vendor fees, solicitor fees, survey charges, negative equity or stress. I wouldn't have it any other way...

Gary Erwin, Belfast

I agree with the comments on legal differences by country. In Belgium I have signed a nine-year contract rather than the standard 6 month or 1 year in the UK. However, I can decorate but am responsible for a significant amount of the maintenance on the house so not so "hassle free" as expressed in an earlier post. Landlords are much more hands-off here.

Waterloo, Belgium

I hate renting. I have had so many problems with landlords not fulfilling their legal obligations to their tenants. One in particular promised to finish all repairs on the flat I was renting with friends at the time, which he did not do. We were without a working bathroom for two-three months, which you can imagine was a massive inconvenience. Apparently we had no rights to do anything to stop this and no-one helped us. We ended up having to move out. And the last landlord I just recently had evicted us, which forced myself and my partner to move back in with my mum until we could find the funds to get our own place. I know some landlords are cool, but I don't think many are following protocol and no-one seems to be doing anything about it.

Kay, Hants

I save £2,000 a month renting vs buying. I stick that in my pension and get higher tax relief, a guaranteed 67% return from the government in the first year. Some see renting as paying the landlord's mortgage but I see it as him subsidising my lifestyle, while I laugh all the way to the bank.

Mike, London

It's impossible to live, rent and save for a huge deposit, unless there are two of you on above average earnings, once you take into account of paying enormous student debts. Renting needs to be made a lot more secure and social housing needs to be restored to its rightful place through the building of far more homes. Government action is also needed to reduce the price of property to bring it in line with average people's earnings. However, none of this will happen with this government or any of the alternatives unless people speak up and force them to change.

Nick Bromtpon, Bristol, UK

I have rented in the UK and France, and am now an owner occupier in the UK. Beware comparisons such as those made in this article that say "xx% of houses are owner occupied in France and this is lower than yy% in Britain". Its common in France to own a house, rent it to someone else (who possibly also owns a house) and rent a place of your own. The owner occupying percentage looks a lot lower, but it's artificial. One of many reasons for this phenomenon is that there is an equivalent of 10-15% stamp duty on house purchase and there are also tax reliefs for improving rented properties.

Andy Barnard, Berkshire

I'm in the fortunate position of having a couple of properties which I rent out. I understand that tenants want security and I think that would be a good thing - as long as there is security for the landlord too. Consider what happened in one property about two years ago - the tenant decided to skip and took all of the copper pipework out of the property, destroying significant parts of the property in the process. The insurance company paid about a third of the costs of repair, claiming the rest was not covered as it was theft, the police (despite knowing who had committed the crime) were not interested. Net result was that I was several thousand pounds out of pocket, for a property which rents for a couple of hundred pounds a month. I know that a lot of people will berate me for simply being a landlord - which I'm frankly sick of hearing - we're not all ogres and personally I've worked very hard over the years to see pensions become virtually worthless and the rental property I have is my only hope of some sort of pension. I wish that I had a public sector pension...

Ian , Worthing, West Sussex

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