With low mortgage rates and rents remaining high, this year will see three-quarters of professional landlords purchase more properties and the number of prospective landlords looking to buy their first rental opportunity is also running high. However, although 2013 might be a good time to be a landlord, the same can’t be said for their tenants. While just over half of those currently renting would like to buy their own home, they cannot afford to make a purchase, resigning themselves to the fact they will have to continue renting until their financial situation improves.
As a tenant it must often feel that both landlords and letting agents are keeping them in their current position due to the financial demands placed on them; many would-be first time buyers have no option other than to rent, but this hinders their ability to save for a deposit. The administration fees charged by letting agencies can run into the hundreds, which when you consider what this covers, does not represent good value for money; providing this money upfront along with a deposit can be a big financial drain for tenants. That is before making their monthly rental payments; at the end of 2012 average the UK property cost £782 to rent each month, with tenants paying almost £300 extra on rental a year. Competing with landlords for the same properties where they would choose to live does not help either, further hindering their attempts to escape from renting.
Calls for greater regulation
The figures showing continuing difficulties amongst tenants come at a time when MPs are formally investigating the problems facing “Generation Rent” – the generation of young people in the UK forced to rent. Known as the Commons Communities and Local Government Committee they will consider whether the rental industry needs to be more carefully managed with tighter controls needed to regulate landlords, letting agents and the contracts they have with their clients. With rental yields on average 5.7% and mortgage rates below 4%, this enticing business venture is attracting landlords in great numbers who do not have their tenants’ interests at heart. If the industry was more regulated rogue landlords and letting agents trying to exploit tenants would have nowhere to hide. Investment within new affordable housing schemes and the entry of respected businesses into the private rental sector may additionally help to ease the troubles currently faced by first time buyers.
By Amy Millband