New research from estate agency Knight Frank reveals that there will be a huge increase in the number of people renting property in the UK over the next four years.
The research reveals that by 2021, 5.79 million households would rent from a private landlord, up from five million now. This means that approximately 24 per cent of all properties will be rented rather than owner occupied.
Affordability is the main factor behind the majority of renter’s decision to rent. Of 10,000 people surveyed by Knight Frank, only a third said they were renting through choice. Meanwhile, a fifth said they chose to be tenants as it allowed them to live in an area where owning a home was unaffordable.
“The number of people renting out of choice rather than due to affordability of ownership constraints is an interesting indicator of how the private rented sector market will continue to thrive in terms of tenant demand,” said Tim Hyatt, head of residential lettings at Knight Frank.
The research found that the most prevalent type of household in the private rented sector is couples living without children, followed by those living on their own. Together, these households account for 59 per cent of those in the private rented sector. A significant number of tenants are saving to buy a property, although many are unconvinced they will be able to do so in the foreseeable future.
The agency expects more high-level investors to purchase properties for use in the rental sector over the coming years, replacing small-level potential buy-to-let investors who have been put off by recent changes to tax laws.
According to the latest property price survey from the Halifax Building Society, the average cost of a house or flat in the UK is now £220,706. Yet there is a chance that the average price may drop slightly over the next few months.
Many experts believe that the result of last week’s General Election could slow the market for the time being, as the uncertainty caused by a hung parliament could cause those currently in the process of buying or selling a home to pause for several weeks until the country’s future is more certain.
However, this uncertainty has caused yet another fall in the Pound – an outcome which could tempt more overseas buyers into the UK property market, much in the same way the fall sparked by Brexit last year did.
Increased overseas buyers is another factor in pushing up rental properties, as many foreign investors buy to let, rather than buy to live.
Article published 13th June 2017