What if I have to rent rather than buy?
By Jo Eccles
Q: I’d love to buy a property but I can’t afford to so renting seems to be my only option, do you have any tips on how to get the best rental opportunity?
A: I recently participated in a Google Hangout answering questions from potential buyers and tenants on exactly this topic; if you can’t afford to buy don’t panic. Unlike the UK, where our population seems to be obsessed with owning a home, in many other European countries the trend is to rent instead of buying.
One big negative about renting versus buying is that you don’t have certainty that you’ll be living in the property long term. With the average tenancy agreement being just 12 months long, it can be quite unsettling as a tenant, however, you can request a longer tenancy period, but it is not always guaranteed.
When viewing a property, ask how long the existing tenant has been living there. If they’ve been there for a long time it’s usually a good sign that they’ve been happy in the property and that they’ve had a positive relationship with the landlord. Also ask who the landlord is and what his or her situation is – find out if the landlord owns the property as a pure investment, suggesting that they will be unlikely to want to use the property at some point themselves, unlike a landlord who is perhaps working abroad temporarily but may return to the UK and want to move back in.
If you do make an offer for a longer period, remember to be really clear in your offer. For example, your offer could be for a 24 month period with a tenant only break clause after 12 months, this would allow you to move out from 12 months onwards but the landlord can’t serve you notice to leave for the full two years. Some landlords won’t agree to this, but others will. You can even include a renewal option for a third year.
Lastly, do address in your offer what happens to the rent after the first 12 months. Typically the rent will increase each year, in line with the Retail Price Index, and this is usually fixed in tenancy agreements as a minimum 3% increase and a maximum 8% increase per year. You can negotiate on this so if you do need to commit to an annual rent increase, try to work out a good deal.
If you have a question you’d like Jo to answer please email email@example.com or tweet her @joeccles.