The number of households in the private rented sector (PRS) is forecast to grow by 24% over the next four years, meaning one in four will be renting rather than owning their home.
The PRS has already doubled over the last ten years and is expected to continue its growth to 5.79 million households with 68% of current tenants expecting to still live in rental accommodation in three years, Knight Frank’s latest tenant survey has revealed.
The report explains that the growth of the sector comes from the changing conditions in both the housing and labour markets. Especially younger workers pointed out that the actively choose to live in rental accommodation as it means they can move around for work more easily.
Furthermore, the report also explains that rising house prices are putting some constraints on those tenants who are intending to own their home, leading them to a longer stay in the PRS whilst they’re saving for a deposit.
One of the biggest members of the PRS is the build-to-rent sector, which is constantly growing. This sector incorporates professionally managed rental accommodation in purpose built blocks. The market has only emerged over recent years but has been growing strongly since and has now an estimated worth of £25 billion.
The report also looked into the sector’s most common tenants. Couples living without children make up the biggest group, followed by those living on their own. Together, these households account for 59% of the PRS.
About 25% of households are families with children and 12% are made out of sharers, a number that increases to 26% when only looking at the capital.
According to the Knight Frank survey, 37% of renters do so out of choice. When asked why, they named reasons such as the flexibility of renting, not having to carry the responsibility of owning or living in an area they could otherwise not afford to live in.
Dr Diana Babacic, of the PRS Research Consultancy, commented the results:
“We expect the demand for privately rented properties will continue to grow. Official household projections show 1.14 million new households being created between 2016 and 2021.”