Britain’s attitude towards rental properties is very different to some of its European neighbours – and not in a positive way. Whilst many Britons have the mindset that buying your own property is a laudable ambition, it is not shared by their counterparts in Germany, for example. Now that the dream of home ownership is out of reach for many people in the UK, it could be wise to learn to improve our attitude towards rental properties. It is predicted that the number of households will rise by about 24% in the next five years. So what can be done to improve the reputation of the rental sector? Seeing how the Germans feel about renting is a step in the right direction.
For a start, tenancies in Germany tend to be about eight years, rather than the standard one-year rolling contract in the UK. Longer tenancy agreements would suit both parties. Tenants would have more security and would know they can put down roots in their home. Landlords also have the security of knowing the property will be providing an income while avoiding letting fees and void periods. Also in Germany, rent rises are tied to inflation which assures tenants that they are not going to face rapid rises regularly. This is another reason why they are likely to stay for longer in a property – they have a fair idea of how much they will pay in rent for the length of their tenancy. Investors are also clear about the income they will get from their property as they know what each one will produce in terms of income.
Another plus for Germany is that the country has a lot more purpose-built rental blocks than the UK, although this is starting to change. UK rental portfolios tend to consist of small apartment blocks or even individual apartments within blocks, as well as standalone houses. These are more inefficient to manage than a large, purpose-built rental block of about 100 apartments, as can be found in Germany. These are more efficient to manage with lower maintenance and repair costs. The block can be managed in its entirety, rather than in individual apartments. Costs could be kept lower by having one internet supplier for the whole block or one utility provider, for example.
By looking at the German model, the UK would be well prepared for the future, when even more rental stock is needed to meet increasing demand.
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