How to be a happy renter
The profile of those who rent is changing - and fast - as we catch up with our European neighbours. Today, more and more of us are choosing to rent instead of buy and are happy to do so, says long-term tenant Conor Skehan, while Vicki Notaro meets some of the new renters
Published 14/02/2016 | 02:30
You probably think that Ireland has one of the highest rates of home ownership in Europe. That was true 25 years ago. But not anymore. Now only 70pc of us are homeowners and that figure is falling. That makes us pretty average Europeans where more than half of the population in each EU member state lives in owner-occupied dwellings - ranging from about half the population being homeowners in Germany to almost everybody being one in Romania.
Our home ownership rates have fallen steadily every year since 1991 - through boom and bust. Ireland's rate is falling still. The pattern appears to be that more people rent in older, wealthier more mature European economies such as Scandinavia, France and Germany while they own more in poorer countries. Ireland is changing fast, and as we change, our patterns of owning and renting will change too.
Baby boomers are leading the charge. All over Ireland those born between the years 1946 and 1964 are reaching retirement age. They are a wealthy, healthy, financially savvy generation. Many of those who have avoided the negative equity trap are starting to downsize now that the nest is empty. Some buy, some rent.
The younger creative classes, the hipsters and millennialists are renting too - the closer to the city centre the better. Closer is smaller and more expensive, but these are trade-offs that they are happy to be where it's hip and edgy and smart to be seen on a Saturday morning walking your dog in your downtown neighbourhood. These are the DOODs (the folks who Don't Own Or Drive) - the creative, well-off trendsetters. They make lifestyle choices. They use LEAP Cards and Dublin Bike. They rent.
Baby boomers and hipsters are smart, very demanding and growing in numbers. Watch that space as they will add their considerable political clout to improving the legal basis for renting.
Finally there are demographics, telling us that we are settling down later, living longer, h--aving our kids with us for a fleeting 25 years of our 65 adult years. Where we will live for the three or four different versions of our adult lives is anyone's guess - but it's increasingly less likely to be in the same place. We will live in different places at different times of our lives.
Is it possible to be happy renting?
"Renting is dead money - at the end of 30 years you'll own your home" seems to be the common wisdom. But is this true?
It would be true if you spent 30 years only paying back the purchase price. But don't forget the interest which will be about twice the original borrowings over 30 years; plus transactions costs at either end; plus the repairs, renewals and replacements and the taxes.
Those who do these sums reckon that the renter comes out about even, except that they never had to scrimp to save the deposit, replace the kitchen twice in 30 years, put on an extension, a patio, double glazing or a new roof. Renters can usually get better, more central locations than buyers - which means much lower commuting costs. A wise renter will have put that chunk of extra change - say the price of a monthly DART and LUAS ticket (€176) into a better pension. A mortgage-free house is a great asset - once sold - which can be a pretty daunting prospect at 65 years of age, providing your retirement doesn't happen during one of our regular housing busts.
So, are renters better off than homeowners?
The persistence and extent of the debate - in every country - should be a hint that, if there is a difference, then it's a very fine difference - with pros and cons for each point of view.
Home ownership gets more positive coverage because so many powerful forces - such as the construction industry, financial institutions and, until recently, governments have all sought to persuade us to own bricks and mortar.
It's not a hard sell, human beings are deeply anxious about where they live.
The need for shelter has been recognised as one of the deepest human needs since needs were first prioritised by a psychologist called Abraham Maslow in the 1940s. In Maslow's Hierarchy of Needs only air, food and water are more basic than shelter - quite simply we need these or we will not survive.
So, as a species, we are easily panicked to stampede in search of the shelter we think is most secure. It is easy to be swayed when trying to decide between the seeming security of home ownership and claims that rental is more vulnerable.
Choice about renting can sometimes be the first stumbling block when thinking about renting. There is a widespread - and mistaken - belief that renting is an 'involuntary' state of affairs that everyone would own if they could. It is certainly true for the majority of couples with children but not so for couples without children or single-person households such as the DOODS and Empty Nesters already mentioned. These groups very often rent, and many do so out of choice and their numbers are increasing very quickly.
Ireland's population is changing very fast, and in surprising ways. The Housing Agency advises that by 2020 over a quarter of all housing needs in Dublin will be for one person, while nearly two-thirds will be for two or less. This is only catching up with the US and UK where about a third of the population lives alone. These numbers arise from a wide range of reasons that include a larger number of older people; later age for starting families; more marital separations; more international workers - to name but a few. These are the groups who are most likely to rent.
So it may have been true in the past that only people who were poor rented. But that is changing. Already in Dublin now, over a third of all households rent. Renting is increasing - split about two-to-one between private renters and those who rent from local authorities or housing associations.
Making a decision about whether you will be happier owning or renting has long-term consequences. So it is a good idea to take a long-term view. The numbers renting are increasing, the quality and range of types of places to rent are improving. In the middle to long term, the legal protection of tenants will continue to improve. Ireland will see more and more professional landlords offering built-to- let accommodation in houses as well as apartments.
Most surprisingly, we may increasingly find that the question "Are renters better off than homeowners?" has different answers for the same person at different periods of their lives.
Many of us may indeed choose home ownership for parts of our lives and we may also choose renting for other - often longer - parts of our lives - finding happiness in different places at different times to suit our ever-changing needs.
To conclude, renting is a normal, rational choice that more people are likely to choose, for a wide range of reasons.
Those reasons are only getting better so the likelihood is that you are more likely to be a happier renter as time goes by.
Conor Skehan is chairperson of the Housing Agency.