In my 35 years as a property lawyer, I have seen a sea-change in the balance between ownership and renting. When I first cut my legal teeth, the Rent Act 1977 provided security for tenants and controlled rents below true market rate.
As a result, there was little incentive for a prospective landlord to add to their portfolio, and the buy-to-let investor was not a significant player in the market. Homes were usually bought by owner-occupiers, and to buy soon after getting a first decent job was the norm, even though mortgage rates were high – my first loan in 1983 from Abbey National came with a 12 per cent coupon.
The resultant shortage of homes for rent, further reduced by the sell-off of council houses, caused the Thatcher government to bring in the Housing Act 1988, creating the concept of assured shorthold tenancies, which gave a right to the landlord to recover the property at the end of the contractual term, and also relaxed the system of rent control significantly for new tenancies, so that the rent was a proper market rent or very close to it.
Renting for a year or less fits with the shorter-term and wider view taken by my children’s generation of their working lives
With the prospect of a decent return, enhanced by subsequent amendments to the 1988 Act so that almost all tenancies to individuals are now assured shortholds, the buy- to-let investor gradually came back into the market to compete with the owner-occupier and contribute to the extraordinary inflation in house prices over two decades up until the crash of 2008. Since, the market has been patchy, with some value attrition, but still nothing like the “hard landing” correction, especially in London, which has been forecast for many years.
All this has led to a quantum shift in the attitude of young occupiers; faced with the prospect of funding large deposits and huge mortgages at interest rates likely to rise from their current historically low levels, they are resigned to renting for much longer than their predecessors. But are these shallower property roots part of a wider transition?
As an employer, I see a trend among our brightest young talent that, while they are willing and able to put their all into their profession from week to week, it is still their career for the time being and not necessarily what they want to do for the rest of their lives.
Similarly, to “make partner” or become a director of the company can no longer be the assumed ambition, and employers have to be ready to give short-term reward rather than rely on the long-term prospect of promotion for loyalty.
Renting for a year or less fits with the shorter-term and wider view taken by my children’s generation of their working lives, and the political and economic uncertainty in the years ahead means there’s no reason why we should see a reversal of this trend any time soon.
Bircham Dyson Bell is a multi-disciplinary UK law firm advising private companies, public sector bodies, not-for-profit organisations and individuals since 1834. Visit bdb-law.co.uk to find out more