An Englishman’s home is his castle. So goes the saying and, with it, the implied mantra that has governed the UK property market for decades. If you have money, home ownership is where you need to be heading.
But the castle’s appeal has been waning steadily in recent years, and prospective residents are acting accordingly. Home ownership rates across the UK are dropping – from highs of above 70 per cent in the early noughties to around 60 per cent now.
In London last year, the number of renters edged past the number of homeowners and buyers. This should have served as a wake-up call that the way we are choosing to live is changing fast.
The push factors driving people, especially millennials, away from property ownership aren’t difficult to recognise. House prices in the capital are nearly 12 times average incomes and, while interest rates remain low for now, obtaining a good first-time buyer mortgage is a tall order.
The latest scandal surrounding ground rents – where leaseholders have been paying out thousands in spiralling charges – only underlines the hurdles that come with getting your own place.
But what are millennials being pulled towards instead? It’s not the traditional buy-to-let rental model, caricatured by absentee landlords, beds in sheds and leaky roofs in cramped terrace homes.
Instead, an entirely new mode of living has been quietly revolutionising London renting. Known as build-to-rent, this emergent sector can be best defined as corporate landlords, backed by institutional investment funds, which professionally build and manage purpose-built blocks for rent.
Financially, it’s certainly made a splash. The build-to-rent sector is estimated to account for up to 20 per cent of the UK’s rental market and be worth up to £1.29 trillion.
Over the longer term, its social effects could prove even greater. Millennials have a totally different view of home ownership to previous generations. Millennials prioritise community over the ownership of bricks and mortar. But, equally, they dislike transience and changing address every year or so – stability of tenure is crucial. Build-to-rent developments offer both in spades.
At Fizzy Living, we invest heavily in social events, such as providing rooftop yoga at our Lewisham development, and a business lounge at our site in Walthamstow. We also offer flexible tenancy arrangements, meaning many of our residents opt to stay with us for well over a year.
The build-to-rent sector is leading a step change in the perception of renting towards something more long term, as is the case on the continent and across the Atlantic. In America’s big cities like New York and LA, more than half of their denizens rent quite happily. And across the States, more than 70 per cent of people under 35 are tenants. So why not here in London too?
Given good quality, flexible rental accommodation with no cynical charges like agents or maintenance fees, I can see a capital where renting is not just a staging post to that Englishman’s castle of home ownership, but a milestone in itself.