If you’re on a low income with DC, would you pay more rent for a secure tenancy?

[KegsAndRoast]

DH and I have been served a Section21. We have been in our home for some time, problem free.

We have 3 DC aged, 13, 11 and 11.

The rental sector is turbulent at the moment and landlords are choosing to sell up; we are concerned about having to move from home to home as our DC grow. We are not in a position to buy.

Our rent in our current home is reasonable and likely below market value. Two of our DC share a room.

We have already viewed three new homes this week and plan to put in an application for one of them but we are unsure which one due to the vast cost differences.

One of the houses is a mid terrace with a very small grassed garden. Whilst lovely, it did feel claustrophobic but certainly liveable. The rent here is £150 more per month than what we currently pay and is comfortable financially. We do expect annual rent increases of around £50-£75 increments. Two of the DC will need to continue to share but will have a bigger bedroom here.

The agent showing us around did not have much information about how long the landlord was keen to rent for or when the property was going to be available (other than saying it was soon).

We liked the house but we don’t love it.

The second house we viewed was very run down and the rent reflected this. Whilst cheap, it was not suitable.

The third house we viewed, we loved. It’s in a premium location, it is detached and has the added bonus of being in a type of scheme where the tenancy is secure and renewable. Each DC could have their own bedroom and there’s a large private garden. It is not available until August, which is perfect timing.

However, the negative aspect of this is that the rent reflects the premium. It is £250 above our current rate and is likely to rise at every renewal based on market rates (estimating an increase of around £100-£150 pcm increase, annually). If the rise follows the trajectory we expect, we will eventually be priced out of the home in around 6-8 years time. However, our DC will then be adults.

I am concerned that if we take the house which is cheaper, we are at the mercy of a private landlord, and we may be served a Section21 on a whim and have to move again in a short space of time. One of our DC has special needs so we have to consider this.

However, the other house is costly and whilst it is manageable, it is going to be rather overpriced in a few years. The security of getting our DC to adulthood here feels worth the premium.

WWYD?

Id want to know alot more about the type of scheme where the tenancy is secure and renewable

@CornishTiger It is one of the popular “built to rent” schemes. We are in the south where rents are already high.

I don’t understand how built to rent is any more secure than a normal tenancy. Can you explain further please?

@KievLoverTwo Built to Rent companies buy up huge amounts of housing stock and rent them out to renters. The tenancy is more secure because bar tenancy breaches, anti social behaviour and so on, you’re highly unlikely to be served with a Section21. As long as you’re paying rent, there’s no need to find new tenants or sell up the stock. The company owns the homes, not an individual like in the case of a private landlord.

Ah, I see. Then I would go with that one. Even if you do need to move in six years, your DC will be older and therefore more understanding. Plus the house sounds much nicer. Security is worth an awful lot, which I guess is why you pay extra for it.

@KievLoverTwo This is my perspective too but DH is much more unsure and feels we should find something cheaper or apply for the cheaper house we viewed.

I’m concerned about the market and that the private landlord could change their mind at any point.

Build To Rent is a fast growing sector and there are multiple companies out there offering this now. We have no pets, but most do allow pets by default and offer longer term contracts. It comes at a premium but for those who need the security of a lease, it’s a good thing.

What are your wages/jobs? Any chance of UC top up?

Id go for the more expensive house on the assumption that if you keep working, you should get pay increases that will help, and rent rises have to be reasonable. You can challenge them under certain circumstances. I think I read something about it on Shelter’s website.

If its build to rent (which has its own pitfalls as well as benefits), could you not ask for a longer initial tenancy term? Ie 3 years instead of 1? It’s my understanding that the company investing in these is after a stable long term return so may agree much longer initial terms than is usual in the private sector. 3 guaranteed years with no gaps vs having to redo contract and risk a void/new tenants every year etc. Also are any bills included in the price because that can make a big difference too. It’s worth an ask surely?

It will cost you thousands of pounds to move every time a private LL sells up (assuming you have to provide and move your own white goods and furnishings, which we have had to) and thus could be a false economy.

Take that from someone who has probably spent in excess of 10k moving 4 times in 4 years.

Security over absolutely everything else, imo.

@Jellybean85 DH works full time with scope for small pay rises. I’m a carer to one of our DC who has complex needs. We do claim UC now but understandably, the rates won’t be enough to cover the full rent.

@Delawear I did not know this, thankyou. I’ll look at Shelter.

@TiredCatLady I did not know this either, thankyou. I will certainly ask if they can offer a longer contract .

With the exam years looming I would go for security and a bedroom each.

Yes, you’ll be spending more, but if you can get by, why not pay extra for somewhere you would enjoy rather than somewhere claustrophobic.

Have you researched reviews of the company that manage the scheme?

Have a look at the planning documents for this scheme and see what permissions are in place.

Also look at the government guidance -

Affordable private rent should be set at a level that is at least 20% less than the private market rent (inclusive of service charges) for the same or equivalent property. Build to rent developers should assess the market rent using the definition of the International Valuations Standard Committee as adopted by the Royal Institute of Chartered Surveyors.

https://www.gov.uk/guidance/build-to-rent

@CornishTiger Thankyou. Does that indicate that whatever the market rent is, we should be charged 20% less than that or have I misunderstood?

I would go for the security while your children are at secondary school with exams and teenage issues stability will be worth it

With Build To Rent the benchmark for affordable housing is 20% of the development.

It's worth checking, but statistically any house in a BTR scheme is likely to be market rent, surely.

https://england.shelter.org.uk/housing_advice/private_renting/rent_increases

Thankyou everyone. Having spoken to DH and made the points about exam years, we’ve decided to go for the higher cost but more secure tenancy.