In cities across the UK, the rental market continues to overtake property sales as people’s attitudes towards owning a home continue to shift.
While the newly elected Conservative government may been keen to keep the onus on increasing homeownership levels in the UK, the latest figures show that the balance continues to swing in the other direction.
The latest Property & Homemover Report for Q4 2019 by TwentyCi has revealed that the percentage of rental stock available compared to property for sale is growing across most of the country’s major cities. Leeds leads the way for the trend, where the last three months of 2019 saw 79% of all properties on the market available to rent, with 21% for sale.
There’s also a higher supply of rental properties compared to homes for sale in London (73%), Manchester (67%), Newcastle upon Tyne (64%), Cardiff (64%), Southampton (63%), Nottingham (60%), Bristol (60%), Birmingham (57%) and Sheffield (57%).
Will the government be able to change this trend?
This shift isn’t a new one; it’s been gradually happening for years as house prices have crept up and the rental market has become more regulated and professionalised, making it more appealing. Young people are happier to rent with friends for longer periods of time before trying to get on the property ladder, and even families and older individuals are seeing the benefits of renting instead of buying.
The government has made steps towards changing this over recent years, some of which have been popular while others have been heavily criticised. The additional stamp duty levy on additional property purchases, as well as tax changes targeting landlords, for example, have squeezed some property investors out of the market. Rather than encourage homeownership though, critics say the moves are more likely to lead to increased rents for tenants, thus reducing their ability to save for a home of their own.
While Help to Buy schemes, as well as the scrapping of stamp duty for first-time buyers, have undoubtedly helped many onto the housing ladder, people are still continuing to rent for longer.
Tenants will outnumber homeowners
According to one recent report by VeriSmart, tenants renting privately are expected to outnumber homeowners by 2039 in the UK, and make up 55% of the housing market by 2045 if current trends continue.
Explaining the changes, VeriSmart’s CEO Jonathan Senior commented: “We are currently seeing a shifting mentality in the way we choose to live our lives and for Generation Rent, in particular, there is no longer that urgency to make it out of the rental sector and secure their own ‘piece’ of bricks and mortar.”
Build-to-rent, HMOs and co-living
This new lifestyle choice is being enabled by a variety of new innovations, including build-to-rent developments. These are constructed solely with tenants in mind, with the properties themselves owned by investors and run by management companies. Most of these developments are ideally located for employment and public transport, with added amenities such as concierges, office spaces, communal areas and outdoor space, as well as creche facilities. Some even cater for tenants with pets.
Houses in multiple occupation (HMOs) are losing their “bedsit” stigma and are an increasingly popular choice among young professional tenants. Rooms are normally rented out with individual contracts, and can be cheaper which allows the tenant to live in a better location than they could otherwise afford. Standards in HMOs are also vastly improving, with new rules launched meaning they must be properly licensed, with minimum room sizes and other requirements.
Co-living is another growing trend among private renters. Similar to build-to-rent, co-living apartments come with a community and socialising options for those who live in them, while offering cheaper prices than a standard rental house. They tend to be professionally managed, with all bills and amenity costs included in the rental price. Manchester is the most recent target for co-living developers, according to this article in the Manchester Evening News.
Whatever the government’s measures to keep homeownership levels high, some of these trends look like they are here to stay, as people’s attitudes, priorities and the way they live their lives continues to evolve. Staying ahead of these changes will be the key to success in the UK property market.
