Stepping off the housing ladder needn’t be a backward move

With house prices soaring, more people are choosing to rent long term

Many like Kathryn Martino are ditching mortgage debt in search of a better quality of life (John Lawrence)

It may make hard reading for younger people looking to buy their first home, but there are those who choose to vacate their home-ownership ambitions, sell-up and move into rented accommodation. And guess what, many of them are happy about it.

Take Kathryn Martino, 34, from Bath, who actively stepped off the property ladder five years back.

“This isn’t a question of not being able to afford to buy – far from it. It’s simply that I choose not too as I’ve got used to the lifestyle. I’m currently debt-free and don’t fancy being in debt for the sake of having a place to call home. I’ve already got that, but without the ties,” she says.

Kathryn has no desire to buy again and thinks there are better things she could spend her money on.

Her one-bedroom apartment in the centre of town suits her and her husband perfectly; the pair enjoy the flexibility, the luxury of moving around, and the savings on maintenance or repair bills when something goes wrong, which they argue generally makes for increased, disposable income and better quality of life.

“My husband and I also love not having to commit to a certain city and should we choose to move on, we wouldn’t have the hassle of having to sell a property,” says Kathryn.

Home ownership has been falling since 2006, according to the Government’s English Housing Survey published this week. Around one in three homeowners in England are pensioners with younger generations frozen out of the market by soaring prices. But instead of lamenting the fact that owning your own property is out of reach, is it time to embrace long-term renting?

Nick Cooper, managing director of property firm Northwood, said: “We’re seeing a whole cross-section of society privately renting their homes. As house prices continue to rise, long-term tenancies are becoming the norm, allowing people to live in houses and areas where they wouldn’t necessarily be able to buy. Renting is no longer seen as a short-term option or stop-gap measure.”

Home ownership reached its peak in 2003 when 71 per cent owned their own home. Fast forward to today, however, and outlooks are changing. Properties are too expensive, real wages are lower, mortgages are harder to come by and people stay single for longer and get divorced more often – all of which makes home ownership a less-viable option. By 2020 in the capital, for instance, there will be more renters than owners.

Rents are rising, although at a lower rate than many people think – figures from the Office for National Statistics show they rose by 1.3 per cent in the 12 months to May, which is well below the rate of inflation, although hikes in London (up by 2.2 per cent) outpaced other regions considerably.

A particular worry is that not all letting agents and landlords are prepared for the changing needs of the modern market. Much of the private rented sector is still based on short-term lets – if tenants are seen as disposable, there are far more vulnerable to being treated unfairly by agents and landlords alike.

Housing charity Shelter has also pointed out that having to move can be hugely disruptive to families with children, potentially having only two months’ notice to pack up their things and move out should their landlord decide it’s time for them to go. The Labour Party is in agreement, supporting the idea of longer-term tenancies and stable rents in a recent policy review.

One issue is that there are now many more “accidental landlords”, many of whom are not in a position to commit to long-term lets. However, it is not inconceivable to imagine that landlords who are keen to keep tenants in place for many years (preferring the security and no void periods) can advertise their properties as such, while those who prefer to let on a more temporary basis can be matched up with like-minded tenants.

Lenders can be a barrier as many buy-to-let mortgages restrict the length of tenancies that landlords can initially offer to 12 months, but some of them are showing willing – Woolwich already allows tenancies of up to two years and The Mortgage Works, part of Nationwide Building Society, has recently changed its terms to allow landlords to offer lets of up to three years.

“Other lenders should follow Nationwide’s lead and accept tenancies longer than 12 months as this provides more stability for tenants and there is no real reason why they shouldn’t,” says Mark Harris, of mortgage broker SPF Private Clients. “Some lenders already allow longer-term housing association lets or corporate lets.”

While we wait for the market to catch up, there are things that tenants can do to protect themselves. If you’re looking for a home to rent you should stick to professional lettings agents with accreditation from ARLA (Association of Residential Letting Agents) and insurance to back them up – this will at least give you somewhere to go if something goes wrong.

Brush up on your rights and obligations. All new tenancies are on an assured shorthold basis, but it will either be a fixed-term tenancy running for a set period such as six months, or a periodic tenancy rolling on a weekly/monthly basis. Legally, you are free to live there, undisturbed, unless the tenancy is ended properly, or your landlord gets a court order to evict you (which is, unfortunately, very easy for them to get). The landlord must put your deposit in a protection scheme, and comply with regulations regarding the safety and repair of utilities such as gas and electricity. For their part, tenants must keep the property in good repair.

Problems can arise if landlords prefer to evict their tenants rather than carry out costly repairs, but you should seek some advice if this is the case – try your local council, or get in touch with Shelter – and if your landlord tries to evict you without serving you proper notice or without a court order, you may be able to get your own court order to force them to allow you back in.