Home ownership has plummeted to the lowest levels since 1986, according to a new report, which shows record numbers of renters and shrinking numbers of homeowners. Although the report, carried out by think tank Resolution Foundation, reveals a nation of renters in crisis, it also highlights the growing significance of private landlords and the opportunities to be had within the sector.
Home ownership levels have sunk to 64 per cent, down from the 71 per cent peak in 2003. In the last thirteen years, home ownership has contracted because ballooning house prices and the global financial crisis has effectively locked out a generation. While in 2003, banks were eager to lend and mortgages were easy to come by, in the last thirteen years regulations have tightened, deposit requirements have grown and the average house price has risen by 60 per cent. Nationwide reported the average house price in this country was £196,930 in February, whereas in 2003, it was a more affordable £122,748. Wages have not kept pace.
And it’s not just a London thing. While the capital has been hardest hit by rising prices, home ownership has fallen across every part of the UK. Industrial cities like Manchester have been hardest hit; the Resolution Foundation’s figures reveal that the number of private rentals in Greater Manchester has trebled since 2003. This picture is mirrored across the country, with more people in private rented accommodation than ever before, and renters still searching.
The typical tenant is changing
The growth of Generation Rent means that the profile of a typical renter has changed too, which is good for cautious landlords. Gone are the days of the hedonistic single flat shares; these days married couples with children are just as likely to be renting as their unencumbered counterparts. Green spaces and school places have become just as important a factor in rental properties as transport links and local bars.
Renters are staying put
Renters are staying put for longer too, whether through choice or necessity. The Residential Landlords Association pointed to a recent English Housing Survey, which indicated that private sector tenants are spending an average of four years in a property, as evidence the sector is stabilizing. Long-term renting is now becoming a viable option for couples with children, who want to live a nice life in a nice area but can’t afford the mortgage. All of which is good news for landlords.
Chairman of the RLA, Alan Ward, told Property Industry Eye that: “The evidence shows that tenants in the private rented sector are staying in their homes for longer.
“No landlord ever wants to lose a well-behaved tenant who pays their rent on time.”
PM May has pledged to address this country’s housing crisis as a first priority with a view to getting more young people on the property ladder.
As part of her plans, she is expected to back an increase in Build to Rent builds, as well as shared ownership.
But with the PM likely to have her hands full with Brexit plans in the immediate future, prospective landlords who have the ability to invest in buy to let take advantage of the captive market and make hay while the sun shines. It is summer after all.