Climbing down the property ladder: Why homeowners are selling up and renting
Buying your own property is widely considered to be a top life goal, with many eager to put their renting days behind them, but turns out some former homeowners are now climbing back down the property ladder.
New research by estate agent Hamptons has revealed one in 10 new rental tenancies this year was taken out by former homeowners who have sold up, (the highest proportion since 2016).
No fewer than 117,500 sellers this year have chosen to rent before buying their next home in order to speed up sales in the frenzied housing market.
Typically, these tenancies were short-term, either rolling contracts or six-month deals.
Sellers in Scotland, Wales and the North West are most likely to rent following the sale of their home. In these locations, 16.4%, 15.3% and 11.8% (respectively) of new tenancies taken out this year were to someone who had sold their home.
Is renting the new buying?
There are various reasons for this switch from buying to renting including a growing numbers of sellers looking to rent as a stop-gap amid a lack of properties available to purchase, and a rise in people wanting to test out new locations by renting there first.
"With many sellers facing pressure from their buyer to move as they struggle to find their next home, rising numbers of home-owners are breaking their chain and renting instead," explains Aneisha Beveridge, head of research at Hamptons.
"While moving into a rented home to beat the end of a stamp duty holiday is not new, it is increasingly being used as a stop-gap by house-hunters faced with a lack of stock to buy."
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"Renting before buying has also been driven by house-hunters making more long-distance moves," Beveridge continues. "With growing numbers looking to live in areas they know less well, many more are trying before they buy.
"While moving into a rented home to get to know an area often isn't people's preferred option, it's nearly always more cost-effective than buying the wrong house in the wrong street."
The benefits of renting
As well as providing wannabe purchasers with an opportunity to try out a new area and helping to speed up the buying process, there are some other benefits of renting rather than owning your home.
More flexibility
One of the main benefits of renting is that you are not tied down to having to stay long term in one area.
"If you are someone who likes to see new places and move around, then renting could be the perfect option," explains Paul Malone, founder of Moving Soon. "If you are offered a brilliant job in a new city, you have the flexibility to be able to move there without the long winded process of trying to sell your house."
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Landlord responsibility
Another benefit is that if any of the utilities (such as a boiler) break or need repairing, you are not responsible for this cost (unless you are at fault). "If you were to buy a home and this happens, you would have to fork out hundreds of pounds to get it fixed," says Malone.
Less upfront costs
When you agree to rent a property there may be fees to pay but these will be less than the deposit needed if you wanted to buy a similar sized property. "You don’t need to have saved up a large amount of cash for your deposit, therefore it is a lot easier to find a home and move in," Malone adds.
It puts you in a great position for buying
If you do decide you want to purchase, being a renter puts you in a great position to be able to buy, and buy quickly.
"With a severe shortage of homes for sale and stock levels down -25% in the first half of the year compared to 2020, there's a cohort of would-be buyers who have sold their initial property to capitalise on the demand in the market and are now renting as a stop-gap," explains Gráinne Gilmore, head of research at Zoopla.
"This puts them in a favourable position when they do decide to purchase a property as they will not be in a chain."
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How to make a rented property feel like your own
"Instead of moving into a rented property and just living in the space, there are many changes you can make to really make the property feel like your space," says Nima Ghasri, director at GoodMove.
Get painting
Many landlords will let you paint walls in your home, all you need to do is ask first. "Whether it’s a statement wall in the bedroom or a pop of colour in the living room, painting is a great way to add your touch to a rented property and make it feel like it’s your space," explains Ghasri.
Make a statement with the floor
Completely changing the flooring in your rented property is a costly job that may go against the terms of your tenancy agreement, but a good way of changing up the flooring is by adding a statement rug to your space or even lino. "This will totally transform your room, and as many rented properties have wooden flooring, it helps to make it feel more cosy and homely too," Ghasri adds.
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Add accessories
Adding home accessories is the easiest way of updating and making a rented property feel like your space. "Flowers and plants will help brighten up a space, while purchasing larger items such as ottomans, new chairs and side tables will really help update your rented property and make it more your stye," Ghasri explains. "Adding pictures of friends and family is a great touch too – just remember to use non-damaging hanging strips when hanging your pictures, canvases, and wall decorations."
Make non-permanent changes to existing furniture
You don’t always have to buy new furniture to help make a rented property feel like home. "If your flat is furnished, there are many non-permanent changes you can make to update the furniture to your style. Try adding throws and scatter cushions to existing sofas, add new lampshades and update curtains to really transform the space and add your own personal touch to the property," Ghasri says.
Update the outdoor space
If your rented property comes with a garden or balcony, there are many things you can do to update it. "An outdoor seating area means you’ll be able to enjoy the outdoor space, while adding plant pots will make the space bright and colourful," Ghasri suggests. "Fairy lights are a popular addition for balconies and will help make your space feel cosy and homely."
