21% of renters don’t plan on ever buying a house

New research shows that more than one in five UK tenants will avoid buying a house and plan to rent forever. We take a look at the reasons.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Row of terrace houses.

Image source: Getty Images

More than one-fifth of renters in the UK plan to stay in the rental market permanently and never buy a house. That’s according to a new survey by residential rental company UNCLE. But why exactly are so many people shunning buying a house in favour of renting? Is renting ultimately better than buying? Let’s take a look.

[top_pitch]

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

What is going on in the UK housing market?

The UK property market is enjoying a boom right now. House prices have risen by nearly 11% in the year to May according to the Nationwide Building Society.

The average price of a house is currently almost £250,000, with the average property deposit being £57,000. Of course, many people aren’t in a position to save such a large chunk of money.

Consequently, even with government initiatives like the mortgage guarantee scheme, which allows homeowners to get a mortgage with as little as a 5% deposit, and generous tax breaks like the stamp duty holiday, the dream of homeownership is slowly slipping away from many would-be buyers.

Paired with a relative shortage of homes for sale, for many, the best option is to rent a property.

Renting vs buying a house: What do the stats show?

UNCLE conducted a survey of UK residents to find out their views on renting, and how long they want and plan to rent for. They also looked at renters around the world to reveal the countries that rent the most.

In the UK, they found that more than one in five people (21%) plan to rent permanently. The most popular duration to rent is one to two years. Almost one-third (30%) of UK residents are planning to rent for this long.

Nearly a quarter (23%) said they plan to rent for three to four years, with 11% planning to rent for five to six years. A small percentage (2%) said they plan to rent for seven to eight years, and 6% said they plan to rent for up to ten years.

When it comes to the countries that rent the most, Switzerland leads the pack. Nearly two-thirds (61%) of the country’s residents are currently renting in the private sector.

Following Switzerland are Germany and Denmark, where 54% and 47% of residents are currently renting a house. The UK is ranked 10th.

The full findings of this survey can be found on the UNCLE website.

[middle_pitch]

Why is it that so many people want to rent forever?

While it’s still the case that most people dream of homeownership, high prices mean that many are unable to do so. They are therefore likely to have to rent and save for longer than desired.

Aside from that, a sizeable proportion of current renters simply do not believe that owning a home is all that it is cracked up to be. This is especially true for renters of older generations.

In the survey conducted by UNCLE, for example, 17% of boomers (55-74-year-olds) and 15% of Gen X (40-54-year-olds) thought that too much importance is placed on owning a home. In fact, 19% of boomers said that they want to rent for as long as possible. 

It’s also the case that 12% of both Gen Z (16-24-year-olds) and millennials (25-39-year-olds) agree that there’s too much emphasis on being a homeowner.

Ryan Price, founder at UNCLE, suggests that renting may be a good fit for some people in the post-pandemic world, where working from home has become more common. He says, “Over the last year, the one lasting legacy of the pandemic is the abolition of the negative stereotypes around ‘working from home’.

“Given the flexibility and fluidity the new ways of working offer, renting allows you to move freely and not be tied down to one area. It makes remote working and renting a perfect pair.”

Is renting a house better than buying?

There is no right or wrong answer to this question.

Ultimately, whether renting or buying a house is the better option will depend on your goals, preferences, work situation and, most importantly, your personal financial situation.

We understand that this can be a difficult decision to make. So, to assist you, we’ve created a renting vs buying guide. It clearly outlines the advantages and disadvantages of each so you can make the best choice for your circumstances.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »