Generation rent: what do tenants really think about renting?

The private rental sector (PRS) can be a contentious topic both socially and politically. In recent years, the government has introduced measures to slow the growth of the sector, to try and help first-time buyers enter the market.

But a new report from the National Residential Landlords Association (NRLA) shares some insight into how tenants really feel about renting.

Who is ‘generation rent’? And are they happy with their rentals or would they rather own a property themselves? And what could be the consequences of further reforms in the sector for landlords and tenants? Read on to find out.

Private rental sector – what’s the problem?

The PRS roughly doubled in size between 2000 and 2017. According to Statista, the PRS made up 10 per cent of the housing market in 2000 – by 2017, it made up 20 per cent.

In an attempt to ‘level the playing field’ between landlords and first-time buyers, the government has introduced reforms to slow the growth of the sector.

Section 24 was rolled out from 2016 and has significantly increased the amount of tax landlords have to pay. And the rental reforms bill which could come into effect from May 2023, proposes scrapping Section 21 as well as giving tenants more power to challenge rent increases.

But the NRLA suggests the government is missing the key role private rentals play in people’s lives.

What do tenants think of the private rental sector?

The report paints a different picture of the sector that shows the positive impact rentals have on their tenants’ lives.

When asked if they would like to own a house now instead of renting, only 18 per cent of 2,000 tenants surveyed said they would. Which is contrary to the idea that private rentals are holding people back from buying.

The NRLA’s report suggests this is because many tenants enjoy the lifestyle and benefits that private rentals can offer, including things like:

maintenance – 52 per cent liked not having to worry about maintaining or repairing their property

flexibility – 37 per cent enjoyed the flexibility of being able to move without being fixed to one location

location – 31 per cent said that renting allows them to live in an area they can’t afford to buy in

closeness to work – 45 per cent lived within five kilometres of their workplace

Are tenants getting older?

Private renting is often associated with younger people but this report shows the average age of a tenant is changing.

Tenants aged 16-34 make up 43 per cent of the private rental sector while those aged 65 and above represent nine per cent. This means the majority of tenants are aged between 35-64.

Renters in the 35-64 range are the demographic that has grown the most in the last 10 years. Specifically, the amount of tenants aged between 45-64 has grown 56 per cent since 2013.

Interestingly, the amount of tenants aged 16-34 has barely changed in the same period. Which suggests the growth in PRS has come from more older tenants renting where they might’ve owned in the past.

What don’t tenants like about renting?

The report gives some insight into what tenants like the least about renting. The top three responses were:

expensive – 48 per cent said the cost of renting a property
insecure – 37 per cent didn’t like the insecurity of the tenure
landlords – 25 per cent didn’t like dealing with their landlord

What’s stopping tenants from owning a property?

Unsurprisingly, 63 per cent agreed that saving for a deposit is the biggest obstacle for tenants that are looking to buy.

This closely relates to the 57 per cent that feel property prices are too high . Meanwhile, 41 percent don’t think their income can support a mortgage.

Is a smaller private rental sector the solution?

The government seems to think so, with its goal for the housing market to have a 70 per cent share for homeowners. The PRS currently makes up 19.1 per cent of the housing market and would likely be reduced to below 15 per cent (if the size of the social housing sector stays the same).

However, the NRLA wants the government to act cautiously in its efforts to reduce the size of the sector.

Chris Walker, the author of the report said, “In the political drive to push for 70 per cent homeownership, we ignore these things at our peril.

It then says if the rentals are taxed or regulated too heavily, the sector will become more expensive, competitive, and lower in quality.

The report says a fairer way of helping first-time buyers is to increase housing supply and efficiency of housing stock. It suggests that older households should be able to downsize if they want to and that the PRS can help support this.

The NRLA adds that tenants on lower incomes end up in private rentals because there isn’t available social housing. And because these tenants cannot afford to buy a property, rental properties give them an option.

Reducing the size of the private rental sector is likely to make properties more competitive and expensive. And the report states those on lower incomes will suffer the most and without more social housing, many could be left with few options.

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I-Wei Huang/stock.adobe.com