Are you a homing pigeon or an urban fox? More to the point, do you even know the difference? These ten rental tribes have been uncovered in a new report by Strutt & Parker, Stanhope and Network Homes called “Housing Futures: Urban Renters” to find out what motivates people to live in rented accommodation in the UK’s towns and cities.
These are the renters who have missed the ‘window to buy’ in the property cycle and also might not be able to secure financing. They have accepted renting as their best housing option, and have the income to pay a higher rent so they can be in the right location for their lifestyle. Willing to improve the premises on their own, they will purchase furnishings to fit the property – making it ‘my-space’. They are also likely to enjoy entertaining at home. While they may be adding to their savings and retirement accounts for the future, they are still going to enjoy the finer things in life, for example: gadgets (iPhones, cars, tablets), fine food and holidays.
These are renters who wish to time the property cycle before they buy. Bubble Gazers believe there will be increased opportunities for them to become first-time buyers in the next five years and will not rush into buying a property right now. While opportunities can be found in market troughs, the ability to execute them requires access to both stock and capital. It also relies on speed. Looking over the past 10 years at UK average house prices, August 2006 saw prices of £172,000, August 2010 of £173,000 and August 2015 of £202,000. The lull in the mid period was quickly replaced by growth, resulting in a 16 per cent increase in the five years to 2015.
UK residential property (13.7 per cent) has outperformed equities over the past 30 years (11.5 per cent), which has led to a culture where ‘your home is your pension’. Nest Eggs seek to get onto the housing ladder as quickly as possible. They view ownership as the ultimate aspiration due to its investment status and perceived security. The success of initiatives such as Help to Buy reinforce this drive, with nearly 92,000 loans completed through the scheme from April 2013 to June 2016. Of that, 81 per cent (over 74,000 loans) were completed by first-time buyers. The North West accounted for the highest percentage of loans (14 per cent), followed by the South East (13 per cent) and Scotland (12 per cent).
The arguments around young people being unable to buy their own homes are well rehearsed. But data suggests we are moving towards a nation more comfortable with the concept of long-term renting. Continental Drifters fall into this camp. Their aspirations are more akin to Germany and Switzerland, where rental accommodation accounts for 47 per cent and 56 per cent of the national tenure respectively. In 2014/15, 65 per cent of English renters were satisfied with their current tenure, an increase from 48 per cent a decade earlier. Our analysis would suggest that Continental Drifters are a growing group, although the evidence is currently limited. One to watch.
Epitomised by Tiger Mums (and Dads), the Catchment Chasers are families who rent so their children can access the best schools. In the education postcode lottery that takes place in many UK cities, an ability to move between catchment areas is much simpler while renting, especially if several moves are required as children progress through their education. Recent decades have seen a signifi cant increase in the number of families accommodated within the private rented sector. In 1994/95, according to the English Housing Survey, 16 per cent of private renting households were couples with dependent children, and by 2014/15 this had increased to 23 per cent.
Urban Foxes prioritise location over all else, eschewing space and comfort to attain it. The group is diverse and their drivers disparate. For some, renting is all about lifestyle, offering the ability to be close to work, friends and the best experiences a city can offer. They may be part of the ‘gigging economy’ – highly skilled individuals, employed in multiple jobs and wanting a location that allows them to move between their portfolio of contracts. Alternatively, they may be shift workers, who need proximity to work due to unsocial hours. The NHS, for example, employs around 710,000 people. Not all work shifts, but for those who do, a well-located space is a must.
The desire to return home is strong for many tenants, especially when settling down becomes a priority. Homing Pigeons fit into this category, renting for a period of time before they boomerang back to elsewhere in the UK, or farther afield. While renting, they are looking to build their CVs, have life experiences and perhaps meet their future partners. Although by no means exclusive to London, this trend is probably most marked in the capital. When overseas migrants are removed from the ONS data, it is clear that London is losing people – in the year to June 2014, 68,500 more left than moved in. The majority of those leaving are in their 30s and 40s.
This global, transient and in-demand group is part of the world’s high-net-worth club, which includes celebrities, athletes and socialites. They may only live in the UK for short periods of time, but prefer the flexibility of renting rather than the responsibility of ownership or the lack of privacy in hotels. They may also be part of the business elite, working in the UK on contracts for typically three to five years. In April 2016, 40 per cent of FTSE 100 CEOs were from overseas, including South Africa, New Zealand and the Netherlands. The Globalista is likely to seek established locations such as Knightsbridge and Chelsea, and may pay rental in excess of £18,000 per week.
For many renters, it is worth paying a premium for the convenience and enjoyment of living in a city, especially when it comes to London. Using an Oyster travelcard gives easy access to work and leisure, outweighing the cheaper costs associated with living outside of the capital and commuting to work. However, the difference in price between being a commuter or a London resident is not as marked as many think. We compared the cost of a season ticket, plus the average rent for a one bedroom fl at in 10 popular commuter locations, with rental and travel costs to Zone 1 for London’s 10 cheapest boroughs and found that the monthly diff erence was £243.
Having recently left modern student accommodation, our Uni-Leavers are used to a certain standard of housing. Their preference is to rent within a similar structure rather than move into a shared house. This group values renting for its flexibility and the ability to leave any repairs and maintenance to somebody else. The depth of Britain’s graduate pool is substantial. Between 1996 and 2015, the number of young UK adults in full-time education increased by 72 per cent to 1.9m. In 2012/13 there were over 300,000 UK graduates in employment. In Scotland, 19 per cent of those aged 16-24 are in private rented properties, more than any other tenure.
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