Recent research from Countrywide, the UK’s largest property services group, has revealed a significant increase in the number of individuals moving away from their home towns when they make the transition from renting to buying.
Countrywide’s findings show that during 2015 half of tenants (51%) bought their first home outside of the town or city in which they were renting, a significant increase on 39% in 2008.
This reveals that people are increasingly choosing to rent in areas where they would be unable to afford to buy.
Renting often provides a golden opportunity to live in a dream town or city before the need to compromise on location sets in. Many young renters like to live in urban centres that provide easy access to lucrative employment as well as close proximity to restaurants, shops, bars and cultural interest points.
Many individuals who are currently renting property are well aware that living in such areas is not a viable long term option (mainly due to cost of purchasing property in such areas). As such, their ‘rental years’ provide a golden opportunity to live in ‘dream locations’ that suit their lifestyles during that period.
The latest findings from Countrywide show that once tenants are ready to buy they generally choose more affordable locations, often external to central city hubs.
Tenants in the South of England tend to move furthest when making the transition from renting to buying and this is where the gap between where people can afford to rent and buy has widened the most since 2012. Across London and the South East house prices have increased 42% since 2012, rising from £218,000 to £375,000. Over the same period rents have only increased 19% from £1,000 to reach £1,234 per month.
The growing number of tenants moving further away to buy is both a product of stretched affordability and first time buyers getting older. Tenants are increasingly choosing to compromise on location in order to own their first home. Those renters who bought a home in the last year, bought in a place where the average house price was £35,000 lower than where they were renting.
This research provides a valuable insight for landlords. It highlights the importance of location when choosing where to invest or expand a property portfolio. Landlords whose rental strategies focus on the under 40s professional market could benefit from acquiring sleek minimal maintenance properties located in popular urban locations. So call ‘status locations’ with excellent shopping and leisure facilities, and good transport links, could be a good long-term investment. With the age of first time buyers continuing to increase, landlords could benefit from mid-term tenants who are making the most of opportunity to live in the UK’s most popular locations whilst they can afford to do so.