I was reading a report the other day produced by the Halifax, about the UK property market and why more and more of the younger generation seem to be renting rather than buying. I find it fascinating that over the last 10 - 15 years, the British obsession of buying a house almost as soon as you left school, and the fact that if you rented you were seen as a second class citizen, has turned on its head to a point where the hopes and dreams to own a nice home will be replaced by the ambition simply to live in one.
In the latter half of the 20th Century, you left school, got a job, bought a small house and kept buying and selling property, constantly upgrading until eventually they carried you out in a box. However, the perceived shame and stigma of renting is no longer the case, as it seems that the British are now beginning to accept a lifetime of renting. This is a very important consideration for both Penicuik homeowners and Penicuik landlords as it will transform the way the Penicuik property ladder looks in the future and I might ask whether or not it will exist at all for some people? The make up of households is one important factor, especially in the Penicuik property market. The normal stereotypical married couple, two kids and dog of the 1970’s and 80’s has changed. More and more we have the need for larger houses where two families come together after divorces (+ kids) and need a property to house everyone through to an increase in the number of one person households.
Looking at the data for Penicuik, of the 901 private rental properties in the Penicuik Locality, 27.62% of those rented properties are one person households (249 properties). However, when we compare the number of one person Penicuik households who have bought their own property with a mortgage (i.e. therefore they are still in work), of the 4,705 owner occupied households in the area, only 355 of those properties are a one person household (i.e. 7.54%). Compared to a decade ago, this explosion in demand for decent high quality rental properties that one person households require has not been met with an increase in supply of such properties. More and more I believe Penicuik landlords need to consider this change in the make up of Penicuik households, as I believe this could be an opportunity.
It is true that the Government’s introduction in 2013 of the Help to Buy scheme, where first time buyers only needed a 5% deposit, changed the perception of peoples’ ability to buy without having to save ten’s of thousands of pounds for a deposit. However, it might surprise you, 95% mortgages were re-introduced within six months of the Credit Crunch in late 2009, so again it comes down to people’s own perception. Many youngsters think they won’t get a mortgage, so don’t even bother trying.
Coming back to the deposit, it’s still a fact that once you start renting it becomes that much harder to save for a deposit, regardless of the size. Interestingly, 7 out of 8 renters polled by the Halifax (86% to be exact) refuse to sacrifice the quality of accommodation they currently live in to reduce the amount of rent they pay in order to save for a deposit. This is the crux and the real reason why people aren’t buying but renting... and why demand for renting will continue to grow in the future (i.e. good news for landlords). Penicuik tenants can upgrade the quality and size of the property they live in for a minimal rent increase. The average rent of a two bed property in Penicuik is £700pm, but a three bed is only £150pm more at £850pm, whilst the average four bed rent is £1,000pm. If you had to make that jump when buying, the monthly mortgage payments would be stratospherically more than that! Without any social pressure and better quality rental properties compared to a decade ago, we will become a nation of renters within the next generation, as the UK is becoming more like Europe, where renting is ‘the norm’.
Who is going to supply all these properties to rent? Landlords! Whether you are an existing landlord looking to grow your portfolio or looking to become a ‘first time landlord’, my thoughts are take advice from as many people as possible. However, as the majority of landlords buy their buy to let properties in the same town they live, you will need specific advice about Penicuik itself.
One place for such quality advice and opinion is the Penicuik Property Blog www.thepenicuikpropertyblog.co.uk.