August 3, 2018
In a time where there is a shortage of housing (with demand in some areas vastly outstripping supply), rising house prices, where getting a mortgage is harder and property taxes so inflated that in some higher price brackets it is actually having an adverse effect and slowing down house sales as it is simply putting buyers off – it’s a difficult, challenging and confusing time for both buyers and sellers.
So is this why so many people are quite happy and keen to rent on a long-term basis?
In a recent survey carried out by GVA and PRSim a whopping 71%1 of Scottish renters stated they were happy renting and a larger amount, 82% said it fits in with their lifestyle choice. This very much ties in with the conversations we have with our tenants. So with renting more of a long-term option and no longer just seen as a stop gap, here are five reasons why renting is making people happy:
1. AFFORDABILITY:– Renting overall is obviously considerably cheaper than buying a property. Yes rents are high in many areas of Edinburgh and in some instances can be a higher monthly payment than a mortgage repayment would be for the same property – but, it’s the more affordable upfront costs that make it such an appealing and sometimes, the only, viable option. With a deposit and first month’s rent as the normal down payment for renters, some buyers need to save for years and find what could get into tens of thousands of pounds.
2. FLEXIBILITY:– As a renter, there are no ongoing repair or renewal costs and if your circumstances change you can move on by giving the usual 1-2 months’ notice. The new Private Residential Tenancy recently came into force and is worth a read if you aren’t aware of the changes and how they affect you as a tenant. CLICK HERE
Also as a renter you perhaps could look to build up a more liquid asset base by investing in assets other than bricks and mortar. And when you own your own home there is definitely a tendency to allow the property to eat up your spare cash as you invest in a continuous cycle of upgrading your décor and furniture etc which as a tenant, isn’t necessarily your concern. In fact, only 4% of Scottish renters surveyed stated the importance of being able to redecorate the place to suit their own taste…what could have been seen as quite a major downside to renting really doesn’t seem to bother that many tenants!
3. NO LLBT (Land and Building Transfer Tax):– Let’s use an example…to rent a £400k property in Edinburgh the household may need to find the first months’ rent of say £1600 and a deposit of around £2000. By comparison, buying that same £400k property on the would include a mortgage deposit (around 10-20% is what most lenders are looking for now), £13,350 LBTT, legal fees, the cost of furnishing and household insurance, mortgage arrangement fees and of course the difference between the home report value and purchase price! How long would it take you to save ‘just’ the £13,350!!??
4. CATCHMENT AREA:- You can’t put a price tag on a great education…or can you!? – For those who have looked into buying property in some of the top catchment areas in and around the city, you will know that house prices very much reflect the desire to be near a good school – basically you pay a hefty premium - £121,9522 to be in the Boroughmuir High School catchment (one of Scotland’s leading state schools) to be exact and according to a recent Bank of Scotland report, the average ‘right catchment area’ premium is £41,000(2) !!! So renting is an excellent option to get your child into a great catchment area without the added price tag for the ‘privilege’.
5. LOCATION, LOCATION, LOCATION:– For 79%(3) of Scottish renters it isn’t surprising that they see location as one of the key reasons for renting. Edinburgh is a reasonably compact city divided up into what some describe as little villages within the city…each have their own charms, amenities, pros and cons. Renting is a fantastic way to make doubly sure an area is right for you and your family before taking the plunge and buying. So you can always test drive it out first by renting a property without the commitment and costs associated with buying. If it isn’t the area for you, then you just give your 1-2 months’ notice as opposed to potentially losing money putting a property up for sale not long after you have purchased it or being unhappy stuck in an area that isn’t for you.
With these fairly substantial reasons behind the benefits of renting we aren’t surprised there has been a turnaround in mind set and positive outlook.
Get in touch with us if you have any further questions or would like us to help you find the perfect rental property that you can call home and make happy memories in.
1. New research by GVA and PRSim 2. Parent’s paying £121K more to get into right school catchment, Scotsman.com Sept 2017 3. Usurv survey on behalf of Cover4LetProperty insurance specialists