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I rented a home for over twenty years and with a strong profile in the property sales market this used to lead to some raised eyebrows. During the 20 years or so to 2005, the period I rented for, the London market gained a staggering 492 per cent in value. The last ten years have seen a still robust 73 per cent gain, but I think even the most optimistic commentators would not see that repeating over the next ten.
Owning your own property has always been portrayed as something everyone should aspire to – should is a dangerous word. It’s been linked to financial security for decades and Government policy has often been skewed to keep owners feeling good, but do the pros outweigh the cons of renting? I’d argue not.
There are plenty of reasons why renting is a good idea. With house prices likely to stay flat fear of missing out won’t exist. Renting means no Stamp Duty and agency fee every time you move and it gives you the flexibility to try living in new areas. Government policy is moving towards helping renters secure longer contracts with more security. Best of all, renting frees up your capital to invest elsewhere or start your own business.
Many, mostly boomers, will bang on about how good ownership has been – and with the figures mentioned above I’m not surprised – but with flatlining growth many forget the hidden costs of ownership: mortgage rate uncertainty, moving costs, maintenance, insurance – the list goes on.
Satisfying though ownership can be, there’s little or no reason to feel hard done by if you choose to rent. From a financial perspective, by way of example, the money I might have put into a house went into a business and I’ve gained more financially and professionally from the experience. If Brits stopped looking at property as a piggybank, might they become more entrepreneurial.
Many European countries consider renting the norm with no social stigma and, possibly because house price inflation isn’t an issue there, many pension funds in Germany invest in such housing with long term leases giving known returns for investors. It is this model driving the growth of the Build to Rent sector in the UK and why the government has been looking at longer term initial rental periods. So perhaps we should break a habit of a lifetime and follow the way of the French.
This article first appeared as one of Ed's Spectator columns.