The number of people renting properties in the UK is set to soar in the next few years as ever-increasing property prices put the option of buying out of the reach of even more households.
As property prices rise at a faster rate than wages, more people are being locked out of the property market as they are unable to obtain mortgages or to save sufficient money for a deposit. Coupled with the high rents they are forced to pay, especially in London and the commuter belt, a significant percentage of household income is dedicated to accommodation. In turn, this makes it even more difficult to save up for a deposit.
Forecasts suggest that one in four households will be living in privately-rented accommodation by 2025, according to accountancy firm PwC. By far the largest increase in renters will be those under 40. PwC predicts that more than half of those aged between 20 and 39 will be private tenants within 10 years, leading to the term Generation Rent.
By 2025, PwC suggests that 7.2 million households, who cannot afford to buy but are ineligible for social housing, will rent privately. This compares to 5.4 million today and just 2.3 million in 2001.
PwC chief economist John Hawksworth said that more affordable housing is needed to meet demand, according to an article in The Guardian. He added that plans to make buy-to-lets less attractive to investors would make little difference.
Hawksworth believes that the solution does not have to be in making it more attractive to buy properties but rather in improving the quality of rented properties and allowing longer tenancy agreements to offer greater security.
In other countries, such as Germany, renting is the norm, largely due to relatively cheap rents and a well-regulated rental market. So the UK could follow this course by reforming the housing sector to provide quality rental properties with reasonable rates and regulations to safeguard landlords and tenants.
Better regulations would be welcomed by professional landlords and management companies as it would squeeze out the unregulated or unlicensed players who rent out their properties ‘under the radar’.
The better landlords and management firms have invested in software to protect themselves and their tenants. This routinely includes inventory software for checking tenants in and out of properties, drawing up contracts, keeping reports on the state of a property and its contents, plus an accounting record of deposits paid and monthly rental payments.