DESPITE support for home ownership in the form of Help to Buy, the UK’s private rented sector is expected to
DESPITE support for home ownership in the form of Help to Buy, the UK’s private rented sector is expected to grow by a further one million households, with the resulting pressure on stock pushing up rents, says international real estate adviser Savills, which last week released its five-year residential market forecasts.
The private rented sector grew by two million households in the 10 years to the 2011 Census, with the sharpest growth being in the mortgage-rationed period since 2007.
This has created pockets of acute stock shortage, particularly in major cities where the demand is concentrated, and Savills now forecasts that average UK rents will rise by 21 per cent over the next five years.
The London mainstream market, where the imbalance between tenant demand and supply is most acute, will see higher rent increases than any other region or market sector.
Here, values for mainstream rental properties are expected to increase by 25.8 per cent over the next five years, marginally outpacing underlying house price growth which is expected to total 24.4 per cent.
Lucian Cook, director of Savills Residential Research, comments: “The newly launched Help to Buy scheme will allow some trapped renters to access home ownership even though costs of home ownership will exceed those of renting, but we anticipate that the major beneficiaries of any increase in net lending are likely to be existing homeowners.”
Tanya Blake, Head of Savills Home Counties lettings, adds: “Whilst rental growth is predicted to be highest in London, we are seeing high demand for property in the Home Counties, where quality of life combined with ease of access to the capital and international airports, appeals greatly to applicants.
“This is particularly the case for professionals and young families looking for flats and two- to three-bedroom houses - especially in town centre locations — where availability is in short supply and demand high.”