Renting

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Sweden’s hinterland offers great ‘deals’ on large rural properties, for those who can afford to live in near-abandoned forest communities.  But for single-bedroom apartments, the story is very different – the average wait is around 24 months and the situation in Stockholm is far, far worse.

That’s the picture painted by the Swedish Union of Tenants (Hyresgästföreningen, in Swedish) in a recent report.  A new review by the organization found that waits are extremely long nationwide.

‘Imagine comparing these queues to other things in life,’ observed report author Jonas Hagetoft.  ‘In two and a half years you could have children or sail around the world almost three times.’

Hunting studio apartments may be a matter of lying in wait, but the queues for 4-bedroom houses are even longer.  To secure a contract for a family-sized flat, tenants need to wait for an average of four and a half years, according to the tenants’ union.

Part of the problem is that letting and subletting are governed by different sets of laws in Sweden.  Subletting offers fewer rights as a tenant, so the first-hand contract is what everyone wants.

Obviously, when the market can’t supply a thing within a reasonable timeframe and at a reasonable cost, the result is a black market, and Swedes are no exception to this rule.  There’s a thriving black market in bribery and corruption, where house hunters pay cash to skip official housing queues or get bumped up them.

As might be expected the more desirable the residence – the more urban or economically active the area, for instance – the longer the wait, with waits of up to six years for a four-bedroom home common in up-and-coming areas.

Of the 21 counties that make up Sweden, only Dalarna county, in the country’s south-west, has queue times of under a year.  In Stockholm, Uppsala, Halland and Norbotten, queues were longer than anywhere except Stockholm: there, they can reach seven and a half years.

Mr. Hagetoft said that, ‘local politicians who want to show social responsibility should strive to have the shortest queue time possible, ideally around two to three months.’  How much of the solution to the Swedish housing crisis is in the hands of local politicians is a different question, though: having built relatively little since the 1970s house-building boom, the Swedish government is now under pressure to spur on the construction of housing to remedy a system characterized by bottlenecks, shortages and queues.

In major Swedish cities, there’s a keen contrast to the rural situation: property is ‘dangerously overvalued,’ according to Bengt Hansson, a researcher at the Swedish National Board of Housing, Building and Planning (Boverket).  As long ago as October of last year, Mr. Bengt warned that Swedish housing prices were 25 percent above fair market value.  FMV is always going to be a disputed figure, but what’s beyond dispute is that between queues for rentals and bidding wars for purchases, Swedes who have a home are likely to hang onto it for the foreseeable future.

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Demand for rental property in the USA remained strong in March, the last month for which figures are available, according to the National Association of Realtors (NAR).  48% of the organization’s members who are involved in lettings reported higher residential rents compared to 12 months ago, an increase from 46% in February.

That’s backed up by real estate firm Trulia, whose figures show average increases in the 3.9% year-on-year area.  That means rental increases are outpacing economic growth and food price rises – to say nothing of wages – and have become a driver of inflation.

Discussing the implications of the figures, the NAR said that rising rents may make home ownership more attractive, but may also slow the ability of those who are currently renting to save up for deposits.

‘The March data indicates a more upbeat confidence concerning market conditions compared to February,’ said the NAR’s chief economist, Lawrence Yun.

‘The improvement may represent the seasonal uptick in demand with the onset of Spring,’ suggests Mr. Yun.  ‘Confidence about the next six months also showed a slight improvement in March compared to February,’ he went on, an effect that’s unlikely to be down to seasonal changes.

The problems estate agents were reporting were low inventories of available housing stock, and difficulties in obtaining mortgage financing.  It’s therefore possible that some of the increased rental demand is coming from would-be buyers who aren’t able to move up.

Stronger rental demand is usually a good sign in a housing market where sales and prices are rising, since some purchasers are investors or landlords, and a market where people pay higher and higher prices for properties nobody wants to rent, or whose rents don’t make a profit, is obviously unsustainable.

In the USA, though, that’s not the story.  Instead it’s a market where many people would like to be purchasers, but can’t afford to make the capital outlay.  It’s also a market where the benefits of buying or renting are split geographically, with buying a better financial bet than renting in about half of US metro areas.

NAR members reported that the Qualifying Mortgage regulations and the increases in mortgage insurance premiums had adversely affected buyers’ ability to purchase property.

However, there’s good evidence that the rental upswing is powered by recovery in some places just as surely as it’s a symptom of a weak jobs market and high insurance costs in other places. One area of America where rentals are a sign of growth is Detroit, where median house prices in the metro area rose by double digits.  In January of this year, a BuzzFeed contributor named Drew Philp bought a Detroit house for $500.  But that illustrates an outlier, not the general trend.  As the motor industry picks up, jobs become more stable and secure and the rental market expands, purchase prices in Detroit have risen 38% year-on-year since January 2013, according to Realcomp.  Inventory and sales shrank as prices rose.

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For some of us, renting a home abroad is a step along the road to buying and becoming a fully-fledged, full-time expatriate.  Others – up to a third of Brits moving abroad, according to a recent survey – need property abroad to work from.  For still others, it’s an end in itself, part of a holiday or trip that’s been long in the planning.  Whatever your reasons, renting abroad can be fraught. There’s the usual list of hoops to jump through when you rent a property anywhere: but local customs, culture and regulations can vary too. Before you go any further, read these ten tips for renting abroad!

1: Start Your Search From Home!

It might sound elementary, but that’s why it’s number 1 on the list. Start looking while you have time in hand.  It’s not a bad idea to begin Googling for ‘Long term rental in [destination],’ and in many countries you’ll turn up plenty of English-speaking agencies this way.  In other countries, though, you’ll find that the housing market doesn’t work the way you’re used to: some places have totally deregulated housing markets where it’s a case of ‘let the buyer beware,’ while in other countries most transactions go though a state housing bureau or local housing departments.  Rolling up in-country without knowing this can be a real damper on your trip, so learn it in advance.  You’ll also often find that searching online and talking to agents on the phone or online is only the first step.

2: Don’t Put Down Money Until You’ve Seen It

Don’t pay a deposit, don’t hand over a little cash as a retainer to stop the place going to someone else, don’t pay a 5% holding fee – not until you see the property.  At the best you might find your ‘beachfront view’ is actually a vista of someone else’s wall or that your neighbours have mistaken your getaway for Ibiza circa 1997; at worst the house might either not exist at all, or be nothing to do with the ‘agent.’  Photos can be misleading.

3: Contact Vacation Rentals

If you’re looking for long-term rentals in a certain area and always coming up short, it may be because they just don’t exist in that area.  Investigate suburbs, cities or rural locales in the same area – if you can’t find a long term rental in town, try the outskirts; if you can’t find anything but holiday cottages in the rural area you want to visit, consider looking for a flat in a nearby small town.  Some places are just so tourism-dependant that there’s barely a long-term rental in town, but it can be worth contacting a long-term vacation rental manager and offering a long-term deal, which can sometimes mean a lower price; the lure of guaranteed income through three months or more can be very persuasive.

4: Read the Lease Carefully: If You Can’t, Hire Someone Who Can

A lease is a legally binding contract.  Once you’re in, you’re in, and often have to pay to get out.  It’s important to understand what you’re signing up for, and ‘it’s just a standard contract’ can mean very different things, depending where you are.  Find out things like how much notice you’ll need to give (and how much you can expect!), what your rights and responsibilities are and who’s responsible for maintenance and repairs.  Not only do you not want to find out it’s you when you get hit with the bill for a pre-existing problem: you need to know who to call, too.  Sometimes leases will be in a non-English language – in some countries, the lease will be in the country’s official language by law.  If that’s the case, you should consider hiring a translator or a solicitor or lawyer, depending on circumstances.

5: Review the Property Thoroughly

When you’re renting, you should rigorously document the contents of the home.  Use a camera phone to get footage of the house, including its contents, and close-ups of anything that looks dodgy or worn, so you can prove later that it wasn’t you.  Make sure the official manifest lists things as they really are, so you don’t get charged for things that aren’t your fault, or have repairs refused while you’re there.

6: Check Which Documents You Need

Some landlords will want to run a full-fledged credit check on you.  But when you rent abroad, you have no in-country credit history, so local landlords may have other preferred methods of vetting you.  Remember that, even as you’re wary of being scammed, running up against unexpected cultural differences or otherwise getting the short end, deliberately or not, they’re thinking the same of you – and in some places the ‘magic disappearing foreigner’ is a recurring problem!

In France, they’ll often ask you for proof of income, so wage slips will come in handy.  In Panama, it’s often a letter of recommendation from a local that will get you what you want.  Find out before you start packing what documents you’ll need to smooth your way.

7: Always Negotiate The Price

There’s always a list price.  Then there’s the price you end up paying.  Lest you think this is advice to haggle with foreigners because it’s how they do business, remember that when it comes to houses, it’s how everyone does business: Floridian homes regularly get haggled down by 10%-15% of the asking price, for instance, and the practice is so common that the difference between asking and final sales prices is a key metric for assessing the health of a housing market.

You’re offering something managers and landlords want: a regular income from a long-term tenant.  With no breaks while the property stands empty, they’re financially better off getting a lower monthly fee from you than a higher one from a tenant who’s only there 3 weeks, leaving the property empty a fortnight before it can be filled again.  Talk this through with the landlord or manager: more often than not, they’ll bite and give you a significant reduction.

A word on deposits: In Europe and North America, the norm is between one and two months’ rent, depending; in Uruguay, though, you might be talking about 5 months’ rent.  It differs from country to country, so don’t assume.

8: Research Non-Rent Costs

Some countries have cheap rent and expensive electricity.  Some countries cost £500 a month for a 4-bedroom house – and then £400 a month for power and heat.  Don’t get bushwhacked by unexpected charges.  Do some research, and factor in moving-in and out costs, transport, utilities and any commissions that you might have to pay – as to notaries in France, for example.  Some countries will tie tenants into a monthly upkeep payment separate from the rent, nominally at least, though since you have to pay it or lose the place it’s a distinction without a difference from the tenant’s viewpoint.  If the place boasts a maid service, or laundry, or other services, check who pays and how, and whether they’re optional.

9: Ask For Extras

Other things that might not get mentioned are things that aren’t laid on – for everyone.  A bit of back-and-forth, though, and they could be laid on for you.  Bargain with the landlord or manager for free internet, cable and internet, maid service, use of a car… don’t be afraid to ask, or to open a discussion.  You could get services bundled, or even free.

10: Check for Coverage

City dwellers in Britain expect cellphone coverage and wifi like we expect running water.  But you don’t have to go far afield to find spots where you’ll get no bars and the internet still runs on comically old-fashioned beepy modems: there are spots in the peak district, the lakes and Brittany, as well as in Wales, Scotland and popular overseas destinations like Spain, where there is no cell coverage for miles – and often the radio’s pretty patchy too. Check before you go; if your plan involves Skyping with friends and telecommuting, and the local internet is one step away from the telegraph, your plans could come off the rails.  If the house looks great but you can see majestic mountains rising in the background, check whether they impede 3G or not before you pack!

In conclusion… Ask, ask, ask.  Ask for what you want, ask if you’ll be stuck with what you don’t want, and if you don’t know what the deal is, ask.  That way, when you move, you’ll know exactly what’s going on, and you’ll be in control.