Unlike much of the continent, home ownership has always been the goal in the UK. For many years, the UK lettings market has largely played second fiddle to sales, but things have changed over the last decade or so. Now, residential renting is no longer viewed in the way it once was, and this change in attitude has shifted the lettings landscape considerably.
To buy, or not to buy
The question of whether or not you should buy property isn’t even an option for some. Rising prices, especially in the capital, have left some UK citizens behind, and things don’t look set to change any time soon.
Generation Rent have been let down by successive governments. Despite numerous warnings over the state of the housing market in London, little has been done to improve a situation which simply comes down to supply and demand.
Promises have been made, but the fact remains the same: too few properties means house prices will continue to rise.
Renting vs. home ownership
As recently as 2001, the amount of people living in London who did not own their own home was hovering around the 15 per cent mark, and the majority of them were not long-term renters. Back then, renting was largely seen as something you did prior to making the commitment of buying a property, not something you were in for the long-haul.
Fast forward to today and the figures are somewhat different. Current estimates show the amount of Londoners who are renting residential property is anywhere between 30 to 35 per cent - over double the numbers gathered just after the millennium.
That’s quite a jump in just 15 years, but the next 10 could see even greater numbers entering the lettings market as tenants. According to a recent report by Pricewaterhouse Coopers, London could have more renters than owner-occupiers by 2025. As many as 60 per cent of Londoners may be renting by then, making the capital a city of renters rather than homeowners.
What the new rental market means for tenants
With ever greater numbers of people opting to rent (either through choice or necessity) rather than buy, we could see a shift in pace for rental increases over the next few years. Residential rental prices in and around London are expected to rise steeply, with some economists predicting that rents may even start to outpace house prices as we head towards 2020.
Tenants will have increased competition for housing, and many will undoubtedly struggle with rent increases. While it would be foolish to try and accurately predict the future of a market so reliant on the overall health of the nation’s economy, without a rapid increase in properties rents really do look set to only be heading one way.
What the new rental market means for landlords
A lot has been made of late about the treatment meted out to landlords, particularly small-time investors or those who choose to rent out a property which they have inherited. While the changes in tax and Stamp Duty have hit landlords hard, the future still looks relatively bright for those who are in a position to invest in residential property.
London yields will continue to be lower than other parts of the country as house prices carry on rising, but demand will be extremely strong. Void periods on quality rentals will be almost non-existent, as more and more tenants seek accommodation in a market with a limited number of properties available.
In terms of investment, buy-to-let is still king. With global uncertainty comes risk, but the housing market hasn’t let investors down yet, and we see no reason why that will change over the coming years.
Whether you are a tenant or landlord, it’s never been more important to have someone you can trust on your side. As one of the most highly accredited agents in our part of East London and West Essex, Petty Son and Prestwich can offer you assurances you’ll be hard-pressed to find elsewhere.
So, regardless of which side of the fence you may be on, give our friendly team of experts a call to find out more about what we can do for you.