With renting now a more affordable option than buying and over half of 20-39 year olds predicted to be renting by 2025, what does the future hold of London’s yuppies and young families?
Would you rather rent or buy? Do we even have a choice any more?
Much of the current discourse around London and its housing crisis centres on the fact that wannabe homeowners are being increasingly priced out of the housing market.
Unable to get on the ladder, these poor souls dangle at the mercy of unscrupulous landlords as they watch their pay checks pour into the black hole that is rented accommodation.
If you believe half the media hype you’d think the capital is precariously close to descending into all out generational warfare, with the unwilling renters a hair-trigger away from tearing at the throats of smug baby boomers in a jealous rage.
But is this an entirely fair portrait of the infamously dubbed ‘generation rent’? In his inflammatory column for The Independent Sean O’Grady baited this demographic with his provocatively titled piece: ‘newsflash, young people: owning your own home isn’t a human right.’Equating intergenerational unfairness to the concept that life generally is unfair, he suggests that the capitals young people should abandon all hope getting on the London housing ladder or leave.
In amongst the clickbait he has a few salient points for why we should try and curb our fetish for home ownership.
Succinctly damning “the national Ponzi scheme that is the housing market,” O’Grady posits that if property were taxed in line with other capital gains we could abolish the artificial attractiveness of property as an investment and level the playing field.
Realistically Londoners are going to continue to collectively collude in the idea that property is valuable and property ownership equates to financial security.
When it comes to cost effectiveness it’s actually cheaper to rent in London than to buy. According to recent report from Zoopla.co.uk the owning a home in the capital will set you back £15,216 more than renting.
Zoopla.co.uk calculated that the median monthly rent in London to be £2,109, whilst the average mortgage repayment costs £3,377 over the same time frame.
Whilst buying a property might pay off in the long run, renting is less of a financial burden and can give you a higher degree of flexibility.
Personally I enjoy the freedom renting grants me. I’m part Yuppie in that I’m young, urban and professional, but as I work in the creative industry rather than finance my lifestyle – and my income – skews towards skint Hipster.
Stereotypes aside, the 18 months I spent renting a room in a shared flat set in the decaying grandeur of a mansion block on the cusp of Regent’s Park were idyllic. I’d never be able to buy a home in such an affluent area, but renting meant I could enjoy a slice of London life with the expanse of the royal park on my doorstep with Marylebone Village serving as my local high street.
Ultimately it proved to be more fantasy than reality. I now live south of the river chasing one of the last cheap renting areas in London, huddled next to the roar of the Vauxhall gyrator. I still have my desired flexibility, though, and if the plumbing breaks it’s on my landlord to sort it out.
For those who rent either out of choice or out of necessity the real question centres on how humane the experience is for tenants.
I had a transient childhood, and moving every other year or so feels entirely natural to me. But I can imagine that having lived in one place your entire life it must feel particularly painful to be priced out of your own childhood neighbourhood.
My own renting behaviour is risky. Verbal tenancy agreements, mates’ rates and taking over deposits in house shares have left me in a precarious position. I can afford the risk as I have few possessions and no dependants, but for those with a family or who seek a more stable existence this situation can feel untenable.
A new report from Shelter highlights the fact that one in three working families in England are just a missed paycheque away from being unable to make rent or the next mortgage payment.
It’s certainly something that keeps me awake at night. If I lost my job tomorrow my meagre savings pot means I’d have precious few months to keep my room mine without finding more employment before I’d have to slink away from London, tail between my legs as presumably O’Grady thinks I should.
Government figures show there are 16.5 working age adults in the UK who have no savings to provide a buffer should sickness or job loss strike, and a fifth of working parents would be unable to pay the rent if they lost their job.
A big factor in this mass precariousness is the extent to which London landlords and lettings agents hold the cards.
One resident of St John’s Wood and self-identified Yuppie was shocked to find the difference in rental regulations when relocating from Edinburgh to NW8.
“It was infinitely better than here,” he says. “Leases in Scotland must explicitly list circumstances which would warrant termination of a tenancy, in England they don’t have to. The tenant can’t be charged for Stamp duty in Scotland, but can in England.”
“There’s so much more protection [for the tenant]. Deposit disputes can be referred for resolution by an independent ombudsman. In England landlord and tenant must reach an agreement directly.”
In 2015 the Scottish Government passed the Private Housing (Tenancies) Bill, limiting rent increases to once a year and legislating that three months advance notice must be given. In England if you pay rent on a weekly or monthly basis, landlords only have to give one months notice for an increase. One month is a startlingly short time to find room for a rent increase in a budget, but if you can’t afford to pay up simply moving somewhere cheaper is easier said than done.
Moving house can be particularly costly for renters. “In Scotland agencies cannot charge holding fees, or renewal fees, and get their money from the landlords not tenants,” adds the St John’s Wood émigré. Anyone who has rented in London will have come up against the wallet-gouging scourge that is agency fees.
Last week the flatshare finding website Spareroom.co.uk released a report revealing that prospective tenants are charged an average of £205 per move by London lettings agents. Three in ten Londoners pay over £300 in fees, whilst 15 per cent pay more than £400. 9 per cent of agencies in London even charge a non-refundable holding fee to reserve a room.
This one-off cost of moving is compounded by the increasing popularity of long deposits, typically six weeks worth of rent. As rents rise, the six week deposits rise in line with them.
All in all, Spareroom.com calculates that a London tenant has to find £2,043 to cover fees, a deposit and moving costs.
“The high cost of moving means that flexibility – one of the main benefits of flatsharing – is starting to suffer,” says Matt Hutchinson, director of SpareRoom.co.uk.
“With Renters having to find a new deposit before they get their old one back, many simply can’t afford to move. That can mean missing out on employment opportunities or having to put up with rent increases.”
With punitive agency fees on one side and baby boomer landlords with hungry mortgages to feed on the other, London’s renters find themselves at the mercy of crippling costs.
The financial straight-jacketing can leave renters vulnerable to poor renting conditions. In April campaign group Generation Rent launched a their viral #VentYourRent campaign, encouraging tenants to share their renting nightmares. Tenants in Camden and Haringey took to social media to report everything from tiny rooms, 12 per cent rent hikes and even holes in the walls.
So how can London’s renters get a fairer deal? It’s a question that’s only going to get more pressing. A 2015 report from PwC predicts that there will be an additional 1.8 million households renting privately by 2025, almost one in four UK households. PwC also predict that over half of those aged 20 – 39 will be renting in 20 years time.
The obvious solution is to build more houses, but that’s a whole other (depressing) article.
The rise of build-to-rent developments could be one avenue for change. Across London new purpose built developments are springing up to offer this rapidly expanding demographic swanky accommodation with fancy facilities like free wifi, onsite gyms and concierge services. They might not be accessible to all of London’s renters, but by upping the game private landlords might be forced to compete in terms of cost and quality.
Hutchinson has some (clearly biased) advice for tenants looking to score a better deal.
“One option to avoid longer deposits and high fees, or even to avoid fees altogether, is to deal direct with the landlord or rent a room from a homeowner looking for a lodger,” he says.
There’s something to be said for harnessing the power of a technology enabled sharing economy, but when it comes to delivering power back to the hands of renters it’s got to be about getting the lawmakers to make changes to enshrine the rights of renters.
The Housing and Planning Act 2016 passed into law this year. Whilst it introduces protections against rogue landlords and makes responsible landlord registration schemes easier for councils, it notably failed to address rocketing rents and insecurity for private tenants.
Continuing to lobby policymakers for fairer conditions for tenants, campaigning for the abolition of agency fees and generally making a democratic racket are the order of the day. With London’s renters on the rise if we rise up hopefully we can make a difference.
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