For generations, home ownership was an integral part of the ‘dream’. Get married, have a family, buy a house – that’s the way it’s supposed to work. But for the newest cohort of would-be homebuyers, the dream remains just that.
Selfish baby boomers, wage stagnation, young people brunching instead of saving are just some of the theories people have on why the housing market is more inaccessible for new entrants than ever. Whatever the reason, the fact remains that ownership is out of the equation for many renters, and it’s leading to changing attitudes (and behaviours) around property investing.
Let’s get into the matter in a bit more detail.
Expectations of capital appreciation are different
Residential property, as an asset class, has enjoyed phenomenal growth over the last 30 years. If you got on board, good for you! However, it’s probably not going to be possible over the next 30 – especially when you look at the property markets in major cities.
In London, for example, Brexit and an over-inflated market are affecting property prices:
According to a survey from leading lender Nationwide, the average price of a London home fell 3.8% to £455,594 in the three months to March compared with the same period in 2018.
It’s hard to predict exactly what that next 30 might look like, but the trend shows no sign of stopping in the near future:
December Rightmove data shows a drop in asking prices which could translate into actual falls in the annual growth rate in the run-up to March. Henry Pryor predicts a four per cent fall in London house prices in 2019. Savills forecasts a two per cent drop, as does Strutt & Parker.
Bored of waiting for the market to turn their way, young people are turning to different methods of investing to secure their futures.
The new path for millennial investors
Property, previously thought of as a ‘no-lose’ investment, is no longer trendy – replaced with tech investments and dividend-yielding stocks.
A symptom of the new investment landscape is the ‘FIRE’ personal finance movement. It’s based on making money moves that deliver dividends into retirement. Property is a part of this, of course, but it’s not the only way to secure a future. FIRE devotees are increasingly moving to LCOL (low cost of living) areas and saving huge portions of their income, which they then invest strategically to deliver passive income into (early) retirement.
Jordan Hall is 24 and a fully paid-up member of the movement, eagerly following blogs from the likes of Mr Money Mustache in the US and the Escape Artist in the UK. He earns £50,000 a year as a commercial manager – well above the national median figure of less than £30,000 – and saves 50% of his salary. He moved to Manchester from London because the cost of living was cheaper, shares a rented flat in the city centre for less than £400 a month and cycles to work. He is putting his money into a lifetime ISA and “passive” tracker funds, which follow the stock market and charge low fees because they are not actively managed.
So with buying property off the table (for now) and people taking more control of their lives than ever, renting begins to play a different role in these people’s lives.So too, then, do landlords and estate agents. But they’ll still get married, and they’ll still have families, and they’ll still need a home to call their own - so the role of renting needs to evolve.
How can estate agents and landlords give renters agency over their living situations?
The evolving role of estate agents and landlordsThe industry is changing. The only problem for estate agents is that it’s generally not them doing the innovating.
Buying and selling property has been the focus of tech startups for a while now: empowering homeowners to sell without the bloated fees and drawn-out listing process and greatly simplifying the mortgage application and insurance processes.
These new tech services coexist with traditional estate agents, and give sellers and buyers a good amount of choice over how they’d like to do business. But for the most part, the rental experience is yet to evolve to match the expectations of its customers.
That is, until now.
Residently was born out of frustration that renting property was nowhere near as simple as it should be (for both renters and landlords). Our founder, Tom, was a fed up renter and landlord - sick of hidden fees, shoddy service and the behind-the-times nature of most estate agents.
From the ground up, Residently is designed around renters - flexible move-in and move-out dates form the basis of our ‘Happy Home Guarantee’, which also allows renters to move to another property in the Residently portfolio without charge if they’re not happy in their Residently home. Extra services, like furniture, art rental, and cleaning and ironing seal the deal.
Because of this, Residently attracts a desirable type of tenant: modern professionals who want their renting experience to match the rest of their lifestyle. Residently lets people live their lives the way they want, bring some personality to renting without taking up all of their time.
It all comes back to servicing the needs of the modern renter. And as the rental industry feels the disruption that’s hit banking, retail, travel and transport, customer service will be the main battleground.
Find out more and see our properties here >