Property affordability has been an issue in the UK for many people, particularly first-time buyers and the net effect has been to boost the private rental sector to record levels.
Monthly rents in the UK – excluding London which is inflating at a higher rate – have increased by 4% annually with an average six tenants chasing every available property across the UK , according to data from the Office of National Statistics.
Meanwhile in London, rents have reached a four year high, increasing 10% annually with tenant demand rising at more than nine times the rate of supply.
Stephen Nation, head of lettings for estate agent network Sequence commented that the rental market in London is a hive of activity with close to seven tenants chasing every available property.
" Demand to rent in the capital is rising at more than nine times the rate of supply reaching a four year high of£1,515 per month, up 10% annually, " he said.
Overall demand for rental properties across the UK has increased by more than 15% annually, while the supply of rental properties has dropped by 17%, creating a dynamic where rents are likely to increase further.
In terms of the UK’s domestic market, growth in the private rental sector reflects: poor availability of affordable homes; concerns that unstable incomes may potentially create future mortgage affordability difficulties and a general lack of confidence in the British Government’s ability to lead a sustainable economic recovery.
The situation in the UK is that now, home-ownership is at a 25-year low with many young people favouring the flexibility that living in rented accommodation brings.
Changes to pension legislation at the beginning of the year made it possible for a fresh wave of buy-to-rent investors to enter the UK market. The consequence has been ramped up house prices in certain regional locations, serving to drastically increase affordability problems for more first-time buyers and driving exponential growth in the private rental sector.
Expansion in the UK’s private rented sector shows no sign of abating, with new research from Ocean Finance indicating that almost half of non-homeowners between the ages of 25 and 34 do not believe they will ever be able to buy a property.
" Home-ownership is already at a 25-year low and our survey suggests that this figure is likely to continue to fall. While four in 10 people still say they’d like to own a property one day, they already seem resigned to not being able to do so, " said Ian Williams, Spokesman for Ocean Finance .
The research also found that 32% of current tenants and non-homeowners are happy to continue renting and have no interest in buying, reflecting the growing shift towards the lifestyle flexibility that rental accommodation provides.
For investors in UK buy-to-let properties, this is extremely good news as the supply-demand dynamic presents many opportunities to profit from capital growth and rental yield, with a positive outlook indicating continuing strong demand for private rental properties.
Source: Property show rooms