“Generation Rent” has been a property industry buzz word in recent years. Up until recently, it described younger people who are finding it difficult to get on the property ladder, potentially electing to rent for much longer than previous generations. In many cases, putting off aspirations of owning a property until well into their 30s and even 40s. Some have given up completely.
According to the Guardian, home ownership is falling and it’s a lot bigger issue than some figures show. The rise in house prices and the stagnation of incomes has meant that owner occupation has, in real terms, dropped to about 50% (down from 63% in 2000).
Generation Rent is no longer the sole province of just the young. Increasingly we’re seeing many older tenants enter the market. There are a couple of reasons for this;
- The baby boomer generation who have their own homes but now find their pensions aren’t stretching as far as they’d hope, are opting to sell their best asset and rent somewhere to live instead. Research has shown that some 200,000 have done this over the last few years.
- Others are taking a mixed option – renting their own homes out, while in turn renting a smaller property where they can live more comfortably within their means.
Generation Rent – Double Edged Sword
This last point is something of a double-edged sword. First, it means that there are a number of what could be termed ‘amateur’ landlords coming into the industry. They’re unlikely to be focused on the sector as much as professional landlords and may even not be aware of the legislative structure they need to adhere to. They can also end up being more prey to poor tenants than an experienced landlord as well as encountering problems such as anti-social behaviour and non-payment of rent.
Making sure that these new additions to the property industry get some healthy advice is good for everyone as a whole.
The second point to consider is that taking on a senior tenant can have some major benefits if you are a landlord. If they’ve owned their home in the past, they’re more likely to take good care of your property and generally behave responsibly. They are also likely to deal with minor problems themselves rather than call the landlord out. If they’ve decided to rent out their own home, they will also have a regular income to go with their pension and that means they are less likely to suffer from money worries which decreases the risk they will stop paying the rent on the property. As we all know, being a landlord is never without risk.
The Rise of the Retired Renters
There’s no doubt among experts that generation rent is set to grow in the future. According to the Telegraph, in London the number of renters is set to rise to 60% by 2025. A significant proportion of these could well be seniors who have decided to either sell their existing home or are now renting it out and living as a tenant. Of course, this could also be bad news for those looking to get on the property ladder who may well lose out to a more financially stable older generation when they compete for a rental property.
Northwood is one of the largest and most recognised estate agents in the U.K. and the leading supplier of Guaranteed Rent
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