Tuesday 25 October 2016

Far better to be a generation of renters than falling victim to negative equity

Lorraine Courtney

Published 15/04/2015 | 02:30

Renting equally liberates you to be able to move on easily
Renting equally liberates you to be able to move on easily

Renting used to be dead money. Yada, yada, yada. But after years of being criticised for not shelling out on a property, renters like myself can now sit back on our balconies and watch the negative equity all around us.

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You see, my generation was more or less bullied into buying property - and many now find themselves saddled with teeny three-bedroom semis in estates with cutesy names from the English shires, even though there's little foliage to be seen and the estate sits on the side of a noisy commuter-belt motorway. But after a decade of being told rent was dead money, or that renters were throwing our money down the drain, lining greedy landlords' pockets and getting nothing back for our monthly investment, it seems that us house-less ones are the smart ones. The view from the property ladder isn't so great right now.

Who knows what psychology or colonial legacies lie behind it, but there is no doubt that the Irish used to aspire to owning the ground beneath our feet. The natural trajectory used to be graduating from a succession of grotty bedsits to a mortgage. But new research from Argos suggests that we're no longer prioritising owning a home, deciding instead to stay put with renting, forever. It's a fairly staggering statistic, but it seems that more than 80pc of Irish renters claim that they're not saving up for their own house.

While 54pc of the survey respondents said that they would like to own a house at some stage, for many, house shopping has become near impossible. But a whopping 28pc of them said that, actually, renting sort of suits their lifestyle. Renting means no major commitments beyond your standard 12-month contract, and there can be no fears of winding up in negative equity. You'd probably expect this statistic to refer only to those in their 20s and 30s - renters used to be considered the immature kidults, the commitment-shy and the broke - but this figure has recently risen to over 42pc in the over-55s age bracket too. It seems that we are clearly moving away from the idea that owning property is absolutely essential.

With more and more of us priced out of the property market, long-term rental is becoming increasingly common - and acceptable - in a country associated with a high level of home ownership. The 2011 census figures show that almost 475,000 households were renting their accommodation.

The census also shows that, between 2006 and 2011, there was a dramatic increase in the share of households in private rented accommodation. Between 2006 and 2011 the number of households in Ireland increased by 187,000 or almost 13pc, to 1,649,000, while the number of households renting increased by 160,000. The spurt in letting has led to a sharp drop in overall home ownership. In 2006, the rate of home-ownership was 74.7pc, but it has now fallen back to 69.7pc.

Lifestyle leanings also play their part, with loads of us unwilling to be tied to a mortgage. Never mind buying a second home when you can rent a chateau in France on Airbnb for €200. Even owning the latest album of your favourite band feels a lot less appealing when you can stream it immediately on and offline with a Spotify pro membership, without taking up any space on your hard drive.

I've stopped thinking about buying a house at all, not only because it would be financially impossible for me to buy the kind of place I would like to live in, but because I'm just not sure I care about owning my own home at all any more. Renting allows me to live in an area that I really like, but definitely couldn't afford to buy into. So how can it be money down the drain when I'm living in a great neighbourhood within walking distance of my workplace and I never need to fork out money for renovations, maintenance or bin charges? Renting equally liberates you to be able to move on easily in an age where few things like jobs to marriage are necessarily for life.

Naturally there are downsides to being an eternal renter, but I'm hoping for a sensible future government which will introduce mild rent regulation of the sort that works so well in Germany. In parts of Europe, controlled rents and long leases on well-maintained properties in areas where people would actually choose to live are the norm.

In Germany, tenants cannot be evicted on a whim. Often landlords have to bribe them out if they want control of the property back before the agreed date. Property is of good quality, well soundproofed, spacious and insulated. It's similar in France, where one in five people rent and long leases are available, with rent caps available in some areas. French landlords can only evict those who default on rent, damage the property or breach their contract.

We might never again get back to the fantasy of a home-owning majority, where so many of us used to climb up housing ladders to maintain our own property. The new rules - where first-time buyers and those trading up are only able to borrow up to 3.5 times their salary, and the latter category also need a deposit of 20pc to get a mortgage - hinder that.

Post-bubble and bust the notion that hard work will guarantee you an option on some bricks-and-mortar to call your own is laughable and twee. Moreover, if you are able to survive the hardships of scraping enough cash together for a deposit and secure a mortgage, property simply no longer represents the security it did for previous generations.

The only thing positive about owning your own home used to be security, but the spectacular property market collapse ended that one. Besides the house is never really yours.

It mostly belongs to the bank.

Irish Independent

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