Please read below an update on changes in tenure, 5 year rental forecast and UK quarterly rental figures:
Changes in tenure
In the last 10 years 1,550,000 homes have changed from privately owned to the Private Rental Sector. 550,000 have gone the other way.
700,000 new homes built since 2005 have also become PRS properties.
While it is clear that the PRS sector has been growing since 2005 and number of home owners has fallen in each of the last 10 years a point to make here is that although the tenure has changed the home remains physically.
The main issue we face as a country is a lack of stock as opposed to property ownership, which the Govt seem to be focusing on unfortunately.
Savills released their 5 year forecast and UK rents are predicted to rise by 16.5% by year end 2020 (London 22.8%).
They also state notably that affordability will be the main reason further increases will be held back. PRS households pay a higher % of their income than those in other tenures. Living in larger household groups or receiving Housing Benefit are the most likely routes to ensure affordability which in turn affect the likelihood of rental increases. The potential for higher demand would suggest that larger properties would be a good bet for investment in the coming years both in terms of yield and Capital Gains, bearing in mind the changes in taxation due in 2017 (see my previous post here).
They suggest that the traditional demographic of sharers and young professionals looks set to continue growing as the cost of buying reduces the number able to make the leap into home ownership. As the economy recovers it is this group who are most likely to benefit from wage recovery and in turn ensure rental growth. A bit of a double edged sword for Tenants.
Rents on the up, again
The Office for National Statistics (a personal fave) suggest that renters are paying 2.7% more for their homes than a year ago. As a region London saw the largest increase of 4.1%, however if you remove London the rest of the UK falls to 1.9%. The South East rose by 2.7%, the North East & Wales by only 0.5%.
HomeLet (nationwide referencing company) suggest the average UK rent in the last three months is ¬£749 PCM, 3.5% higher than the same period 2014. Including London we are looking at ¬£997 PCM (9.7%). Much like the above para there are variations to bear in mind such as North West England rents have actually fallen by 4.9%, and also by¬†smaller amounts in East Anglia and Northern Ireland, whereas rents are up elsewhere such as 1.8% in Wales, 7.5% in Greater London and 9% in Scotland. I wonder how the rent controls are going in Scotland. Hmmmm.¬†It‚Äôs lucky they are not in London as the average rent is 108% higher than the rest of the UK at ¬£1560 PCM.
Interestingly the survey suggests 64% of Tenants were expecting to remain renting for another year at least and 90% surveyed stated they were happy with their Landlord. It can‚Äôt be right as according to the media you are all evil & greedy! I guess ‚Äòsupply and demand‚Äô just doesn‚Äôt sell as many newspapers.
Anyway, at least you are not a letting agent 😉