THE private rented sector is growing dramatically and is likely to continue to do so, according to the latest research
THE private rented sector is growing dramatically and is likely to continue to do so, according to the latest research from Savills.
The international real estate adviser has identified that between 2001 and 2011, the number of households renting privately in the UK almost doubled to £4.3 million. This structural shift, which pre-dates the credit crunch, is set to remain and the company expects the private rented sector to increase by approximately 200,000 households each year over the medium term, resulting in one in five households renting in the private sector by 2018, despite recent Government measures to boost homeownership.
Sophie Chick, a senior analyst at Savills Research, said: “Homes are expensive relative to average earnings as incomes have not kept pace with house price inflation. Mortgage availability, the requirement of a sizeable deposit and the cost of monthly repayments have all contributed to making the average mortgage more expensive to service than paying rent — even with increased help of Government schemes such as Funding for Lending and Help to Buy, the latter of which may encourage more buyers on to and up the property ladder in the short term but will not alter the direction of the market. Key drivers point to continued demand for private renting in the long term.
“In addition, due to the inconsistency of supply, demand has helped drive strong rental growth over the past few years and population growth which, according to the latest projections by the Town and Country Planning Association, is likely to create demand for 245,000 new homes a year, adding to the pressure.”
Richard Maby, head of Savills Henley lettings, said: “Our research department has forecast that average rents in the mainstream market will increase by 18.2 per cent by the end of 2017, with the greater part of that growth delivered in 2016 and 2017.”
In the Henley town and country markets we have seen a steady increase in long-term (greater than 24 months) tenancies, highlighting that families are not only becoming used to but are already accepting that occupation of a privately rented home, in the medium to long term is both viable and attractive.”