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Number of people renting in UK rises by more than 25%

January 20, 2023

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Article Summary

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  • The rental market is thriving as more people are starting to see the benefits of renting, especially professionals.

  • Despite the number of houses increasing by 1.4 million from 2011 to 2021, this rate has still not been enough to keep up with the rise in demand from potential tenants and buyers.

  • For first time buyers and those trying to grow their portfolio, this situation presents an excellent opportunity to capitalise on the growing rental market.

As prices of properties in the UK begin to settle, the nerves and worries from potential investors have started to lessen. The rental market is thriving as more people are starting to see the benefits of renting, especially professionals. Renting allows tenants to live a flexible lifestyle and enjoy the possible amenities of a gym, concierge, co-working areas and shops and restaurants nearby. It also ultimately allows tenants to live flexibly, moving from apartment to apartment or city to city depending on their job or personal preference.

However, the result from the rising house prices of 2022 has caused the number of people renting in the UK’s private sector to rise to being more than 1 in 5. According to the government’s latest housing census, the majority of people live in a house or bungalow, but the number living in flats has seen the biggest increase since 2011.

Real Estate company Zoopla says that all the leading supply and demand indicators it measures ‘continue to point to a rapid slowdown from very strong market conditions. We do not see any evidence of forced sales or the need for a large, double digit reset in UK house prices in 2023. We still expect house price falls of up to 5% in 2023.’

As more people are finding it to make more financial sense to rent due to the record-high house prices last year, the number of people renting has sky-rocketed, making the property market an investor’s dream. Tenant demand is sky high across the country as professionals and students alike look for a home that gives them a flexible living situation.

Despite the number of houses increasing by 1.4 million from 2011 to 2021, this rate has still not been enough to keep up with the rise in demand from potential tenants and buyers. It is what has caused the property price rises in the past decade, further highlighting the exclusivity and opportunity for capital growth if you own a property. The number of homes in the country currently stands at 24.8 million, but more need to be built to keep up with the demand.

The outcome of the low supply of properties has greatly contributed to the increase in house prices in the last decade or so. In England and Wales, the percentage of households that own a home has fallen in this time as well. In spite of this, population growth has meant that the actual number of homeowners have increased, increasing from 15 million households living in a property they owned in 2011 to 15.5 million in 2021.

In total 1/3 of people own their property outright, while 29.7% have a mortgage or own a stake in a shared ownership property. One in five people rent their home in the private sector and 17.1% rent it through a local council or housing association, with these figures being very similar to those from 2011.

In terms of homeownership rates according to region, they were highest in the South East and South West at 67.1% and 67% and the lowest in London. The capital has the highest proportion of people who rented from both the private sector at 30% and the social sector at 23.1%.

What does this situation mean for property investors though? For first time buyers and those trying to grow their portfolio, this situation presents an excellent opportunity to capitalise on the growing rental market. Buy to let is as attractive an option as it has ever been, as choosing to rent out a property will almost definitely bring potential tenants to your attention.

The short-term outlook on the situation may look daunting but as several companies and banks are predicting a drop and are preparing for such, it should serve as a positive sign of things to come for the sceptics out there. This is the perfect time to rent out properties, with rental rates higher than ever, and the trends show that they will only rise.

Mortgage rates have started to go down as well, but banks are taking precautions to avoid a potential hit on this, with examples like the aforementioned Lloyd’s Bank setting money aside to help with ‘bad debt’ if the rates rise for any unforeseen reason.

With more potential tenants than ever before, the UK rental market is looking as lively as ever.

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