House Rental Trends, Between Mortgage Interest and Current Lifestyles

Renting a house is economical, environmentally friendly, in line with current trends that require flexibility. Is that right?

SALOMO TOBING

Neli Triana, Kompas journalist

The news about the potential increase in home ownership credit interest as one of the impacts of Bank Indonesia's policy of raising the reference interest rate to 6.25 percent has given rise to the better option of renting rather than buying housing.

Renting a house is discussed because it is considered more economical than buying a new or second-hand house. The choice to become a renter is increasingly being praised because it is said to be part of a green and sustainable lifestyle.

The business of renting residential and commercial spaces is believed to have existed for hundreds to thousands of years ago. In the modern era, the practice of renting and leasing properties has rapidly developed in line with the industrial revolution that began in the 18th century in Europe, which has influenced the whole world.

In urban areas, the business of renting out space for various needs cannot be separated from the explosion in the number of middle class workers.

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Currently, the rental economy has become more complex and diverse. In addition to regular house or vertical dwelling rentals, there is also short-term rental for vacations or other short-term needs. There is also the concept of shared living space, which can be translated by renting a space together for living or business purposes.

KOMPAS/DENTY PIAWAI NASTITIE

Facilities at one of the co-living residences or sharing living space in Jakarta. Affordable rental prices with complete facilities are the reasons this concept is attractive to urbanites.

The growth of rental economy that has become a current economic trend is driven by several factors, including demographic changes, economic conditions, and technological advancements.

One of the main drivers of the rental economy is the increasing number of young generations who postpone property ownership due to high prices and a new lifestyle that desires more flexibility and mobility.

In particular the trend of renting a house, another factor that contributes to the growth of the rental economy is the rise of the gig economy associated with the expanding labor market which is synonymous with short-term contract employees or freelance worker (freelancer).

They have an unpredictable income and often have to move from city to city for work. Renting a house is a more attractive option than owning one.

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Renting a house also becomes a part of the green living campaign in urban areas. Renting means utilizing existing buildings and the tendency of individuals to contract smaller spaces rather than buying or owning their own.

A smaller space means that there is a need for control over ownership of goods and restrictions on purchasing new items. This can reduce spending, waste production, and other associated factors that can exacerbate environmental damage.

KOMPAS/ATIEK ISHLAHIYAH AL HAMASY

Passengers get off the Transjakarta bus at Palmerah Bus Stop, Central Jakarta, Saturday (20/4/2024).

In addition, tenants usually choose a house in the city center that is closer to their workplace or school and market. Access to various destinations can be done by walking or using public transportation. The smaller or even non-existent cost of purchasing fuel also helps to reduce air pollution and city congestion.

With stable periodic rental payments and smaller expenses, tenants can manage their finances better. There is a golden opportunity to increase savings and income by using the excess money for business or other purposes.

If one day you still want to own property, the assumption is that a renter will have a better financial preparation period.

The effective use of place and time helps reduce stress and additional economic burdens that usually hit urbanites in unorganized urban areas (urban sprawl).

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For property owners who rent out their properties or share their living space with others in their homes for a fee, this means saving on routine building maintenance, preserving assets, and increasing income.

Public policy tends to benefit homeowners and disadvantage renters.

Property ideology

Although renting a house has become a trend, the mainstream culture in most countries apparently still looks down upon renters.

One of the American dreams that is rooted in the minds of the people of the United States, for example, is still being the owner of a house with all the complete symbols of comfort and security in it.

In the journal "The history of tenants in the United States, struggle and ideology" (1981) by Allan David Heskin and "Landlords and tenants in London, 1550-1700" (2011) by William C Baer, the patterns of community mindset and various stigmas attached to tenants are discussed.

This understanding is rooted in centuries-old practices. In the past, landlords, landowners, and various buildings used for residential or commercial purposes were synonymous with wealth and power.

Tenants are often categorized as the poorer class, migrants in the city or in places promising low-paying jobs. Influenced by such understanding, the term "property ideology" emerged, which separates the interests of homeowners from those of low-income tenants.

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KOMPAS/HERU SRI KUMORO

A row of shophouses combined in a housing complex in Serpong, South Tangerang, Banten.

Donald A. Krueckeberg stated in his journal, "The grapes of rent: A history of renting in a country of owners" (2010), that according to this ideology, homeowners are considered better citizens than renters. Therefore, public policies tend to benefit property owners and harm tenants.

Intentional bias favoring property owners and harming tenants has been a prominent issue in American public policy. This condition has been ongoing for hundreds of years and the traces and remnants of this policy are still evident today. Similar phenomena exist in other countries, including Indonesia.

Several government policies generally tend to give more opportunities to capital owners to buy, own, and operate land and property. Fair land redistribution for every citizen is not realized. Monopoly practices of land ownership, property, and rental businesses are thriving instead.

In the location of new development areas, it is common to find developers selling apartment units or houses to consumers. Wealthy consumers can buy multiple units that are being marketed. Developers, or through the parties recommended by them, promise consumers that their dwelling can be rented out immediately and generate income.

The practice of excessive land acquisition simply to exploit and control economic resources goes against all principles of environmentally friendly management. The exploitation of land and excessive development activities undoubtedly do not conserve resources.

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The trend of renting out homes for tourism purposes in tourist areas has ultimately become a showcase for capital owners. They can buy or rent cheaply from locals and then develop property rental businesses.

As a result, the rental prices, property purchase prices, and land prices have all skyrocketed. Local residents who need homes for themselves, regardless of tourist business, are unable to afford rent, let alone purchase a property. Cases like this occur in many cities and tourist centers around the world.

KOMPAS/TOTOK WIJAYANTO

Residents seek fresh air in an open space located between the train tracks that divide densely populated semi-permanent residences in the Pademangan area of North Jakarta on Thursday (17/7/2023).

Government control

The possibility of an increase in KPR interest rates and the current trend of renting a house as a lifestyle in Indonesia are expected to give rise to fresh ideas in realizing the right to decent housing for the community. It doesn't just increase the business niche for capital owners, let alone increasingly closing other residents' access to housing.

City managers can see this situation as momentum for organizing urban space, including residential management.

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Data on the number and functions of buildings will help the government map out the supply and housing needs in the city. Strict policies that regulate the rights and obligations of tenants and property owners can be a tool for fair and sustainable housing redistribution.

Until now, the government's efforts to build affordable housing for low-income earners have always been hindered by costs. Affordable housing for the middle class has also not been fully met. Perhaps, if bridged with clear regulations on inter-resident rental economics, one of the chronic urban problems can be addressed.

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