What are the two factors to dent renter’s confidence when looking for a rental home?
When securing a long-term tenancy what are the options and commitments to be made?
Rental property market
Find and Secure a Rental Home
Rent or Own - Decision at some stage in life?
Klauster Properties Ltd - Renter’s Blog
Housing market—driven by sentiments
Nothing is more driven by sentiments than the housing market. There are a two factors that are likely denting renter’s confidence when looking for a rental; concerns about job security and rising housing costs. On the other hand having found a suitable rental home, people feel unsecure while the landlords could end the tenancy by 90 days given notice.
After arguing about the housing shortages for years now the low housing standards of aged homes became the new battlefield. Possibly you have taken notice that the proposal to introduce a WOF (warranty of fitness) scheme for rentals has fallen through. Instead every rental property “will have to be fully insulated within four years” so confirmed by the Government. Further more the Housing Minister has announced plans to strengthen the residential tenancy laws and that especially for the benefit of long-term tenancies.
Now, that sounds like calling for major changes, but actually as savvy renter you can protect your interests already, when you show commitment to sign a long-term lease or fixed-tenancy. If investors could build new housing freely that would steadily eliminate substandard housing. Silence about that the government’s biggest slumlord will cost taxpayers’ a fortune to upgrade state housing for complying with the new law. Many renters have to pay twice as taxpayer for upgrading state housing and higher rents to accommodate recent changes by law.
The gap between housing demand and supply
Since 2010 the housing market has been for many an emotional rollercoaster ride as changed policies have failed to deliver. In fact the new taxation rules in 2010 seemed to be completely gone against the grain when looking at the deepened gap between housing demand and supply. Obviously, the rental property market reacted sensibly.
That is not good news for renters, but if you follow the Homeowner’s Blog you will understand that housing costs hit homeowners even harder. Luckily market rents lagging well behind market values to the benefit of renters when comparing the costs. If you follow this blog you would already know that supply regulates market rents.
Renting is a matter of commitment
Coming back to the question—how can renters secure their tenancy? Looking at the specific of the private rental market and the need of stable tenancies landlords and tenants are sitting in the same boat. Landlords are looking for “preferred” tenants and renters for secure tenancies in terms of duration and rent stability.
When both parties find an agreement (lease or fixed-term tenancy) that also includes commitments in terms of time frame and rent stability, that would result in securities renters enjoy in countries where people used to rent for life. Investors who carry financial commitments for more than 20 years and comply with the 10 years IRD rules, why would they be interested in loss of income during switching tenants or tenancies frequently?
Signing a long-term tenancy
For a “Lifestyle Renter” finding a tenancy for life might be the biggest challenge as that requires two willing parties and a quality rental home. Good housing is in demand and when a house changes hands, the tenant in a “periodic tenancy” (standard rental agreement) commonly has to leave by 42 days given notice. See RTA
A fixed-term tenancy can protect you from unexpected rent increases. Keep in mind the rental agreement is not an one-way road. You can and should negotiate conditions which make a difference to you. An a second approach to take control over your life is signing an option agreement, or for a long-term tenancy a lease-option agreement. If you are not familiar with that, read here more.
Because of the nature of long-term agreements (commitments) I would look at tenancies offered by self-managed private landlords. A property manager possibly would not offer such service.
A private landlord would love to sign a tenancy with a “preferred tenant” for the best interest of his/her investment, to reduce the workload (these people normally have a day job) and certainly plan ahead long-term. A win-win situation for two parties with similar interests, right?
If you as renter are committed to sweeten the deal, you could offer something for the benefit of the property, cost savings or an option consideration payment when choosing a lease-option agreement.
Why would you do that? If you understand that the housing costs paid by homeowners and renters alike do not cumulate on the landlord’s bank account, then you would possibly choose the right tenancy not following common cliché's about renting.
We all have to work to pay our bills and save money just to be able to retire. It really does not matter if people rent or own a home, occupants pay for related housing costs anyway. In the end, all that matters are the sacrifices, commitments and enjoyments we made or have in life. Your life —live it well.
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Renter’s Blog lead to a real person, IT professional, investor, landlord and business owner with interests in sharing experiences. Life is a dream with a deadline, happiness comes from making the right choices and having realistic expectations.
Confession: I have been a happy renter for more than 25 years before buying a family home and later becoming involved in property investments and developments.
I used to live in apartments or rental homes, worked in many different countries and experienced different housing standards and renting cultures. I would love to see a social and legal frame work around housing policies that supports renters and landlords alike.