Rising trends in making the pre-tenancy process more affordable for renters are set to have a considerable impact on the property market. With the industry leaning towards the reduction or elimination of deposits and the impending letting agent fees ban there will be fewer up-front costs when renting a property.
Many have debated the affects these changes will have on the industry, and it’s been suggested that they will provide the lettings market with a much-needed boost whilst benefiting tenants, landlords and agents in the long term.
From helping young renters and encouraging first time buyers here are some of the benefits we can expect to see.
Recent research suggests that almost one million millennials in the UK have been priced out of renting, never mind buying a property.
With the average rental deposit in England and Wales totalling around £970, one in six people under the age of 34 are unable to leave their family home. However, with the letting agent fee ban due to go ahead in Spring 2019 and the trend of reduced deposits, renting a property may become more affordable for the younger generation. This could result in a flood of new prospective tenants into the lettings market, benefiting both landlords and agents.
First Time Buyers
It is self-evident that if the younger generations are struggling to rent a property, they will also find the prospect of buying a home difficult. However, a reduction in up-front costs could produce a market where it is possible to do so.
First time buyers will have to save an average of £48,591 for a deposit on a mortgage if they want to own their first home. A more affordable pre-tenancy process would enable tenants to save, and when complimented with stamp duty cuts, help to buy loans, shared ownership schemes and starter homes these factors could contribute towards shaping the next generation of first-time buyers
A reduction in costs will not only benefit renters but also landlords and agents, as large deposits and agency fees are a key reason why some tenants choose to stay in their current tenancy or why many can’t afford to move out at all. Fewer up-front costs could encourage renters to move meaning the number of renters on the hunt for a new property could increase.
In recent times, landlords have been discouraged from investing in property due to tax changes and the introduction of a stamp duty surcharge. However, if more tenants are incentivised to move this will boost the rental sector and could encourage landlords to expand their property portfolios.
It is important that landlords are prepared for these changes and protect their property portfolios by setting the standard to which properties should be maintained and returned at the end of the tenancy.
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Talk to us about how we can assist with your inventory reports leaving you free to ensure you are investing wisely and maintaining your portfolio.