Investment in the private rented sector could nearly double to a record £75billion by 2025, that’s according to recent research by Your Move, reported by City AM.
Affordability pressures and the need for lifestyle flexibility, investment in the UK’s private rented sector (PRS) is expected to nearly double in size over the next six years, with a corresponding decline in home-ownership, the property agent finds.
The sector currently consists of around 4.5m privately rented households in the UK, but this figure could increase to 6m over the next 6 years. But, says Your Move, the PRS needs to be “vibrant and consistent enough to cater for a wide range of needs.”
These forecasts appear to be corroborated by research from property agents Knight Frank who predicted that the proportion of the UK’s rental housing market is set to grow from 20.6 per cent now to 22 per cent by 2023.
This growth is likely to come from build-to-rent as well as buy-to-let, but so far build-to rent has made a very small impact on the market, nation-wide, with less than 10% of rental housing provided by it. This perhaps bodes well for private landlords as there’s plenty of scope for growth, but taxes and increasing regulation of the sector is in danger of curbing the appeal for investors.
One perhaps surprising revelation from the research is that nearly half of tenants living in private rental accommodation are aged over 46, with only 39 per cent surveyed under 35.
The report says that the rise of the “Silver Renter” may be surprising, but is as a result of the thousands of people in “generation rent” who have turned to the private rented sector, not just because of lack of funds to buy, but for many, as “the most convenient option available to them following a change in personal circumstances”, for example relocation for work, or a marriage breakdown.
The rapidly changing demographics and a shift in the way renting, as opposed to home ownership, is perceived by the millennials and also older people, is creating opportunities for investment landlords who can innovate and provide the type of accommodation that’s needed for flexible living, both for individuals and families.
Your Move says that there are some big differences between the needs of older and younger generations, with lifestyle choices being a “big factor” in how much rent tenants are willing to pay.
Young tenants for example, says Your Move, are looking for additional services such as high speed internet, satellite TV and parking, as well as services to improve their work/life balance, plus they are willing to pay for this. These desires might also run to having a cleaner and a gym.
Older age groups on the other hand might look for connections to the wider local community and they would usually be willing to pay for the convenience of proximity to local amenities as a top priority.
Whereas home ownership aspirations were seen as a long-term goal by 80 per cent of younger renters in the survey, often considering renting as a stepping stone to homeownership, older tenants were less sanguine about their situation and ever owning a home. 46 per cent of those over 55 said that they were happy to rent longer-term, with only 19 per cent stating that they would ever aspire own a house of their own.
But things that all age groups said they valued about renting is the flexibility and lifestyle and the two factors they look for in a rental is the condition of the property (52 per cent), and having a good landlord (46 per cent).