The rental bill for private homes in the UK rose to its highest level on record last year, with tenants paying out £51.6 billion to landlords. According to research by Countrywide, this was £1.8 billion more than the previous year. The estate agency group said there were a number of reasons for this, including more tenants and rising rents. More people are becoming renters because they cannot afford to buy, or they can afford to live in a better area or a bigger property if they rent rather than become a property owner. This increased demand is expected to continue to keep pushing up the average cost of new lets, which rose 2.4% last year to £958.
Interestingly, the rent paid by millennials fell by 2%, as some have now managed to get on the property ladder. That said, between them, they still have the biggest rent bill and have paid out more than £30bn each year for the past four years. Obviously, this sector is still a very important one for landlords to nurture even though they will start paying less rent as they begin to buy their own homes, according to Countrywide. The company still felt their move towards home ownership will be slower than previous generations, as it will take much longer for them to save for deposits or earn enough to buy a property. Meanwhile, Generation Z – people born after 1995 – has doubled the size of its rent bill from £2.7bn to £5.5bn year on year, which is the sharpest rise of all the sectors.
These figures show that the private rental sector is still a healthy investment, despite changing regulations and the fluid rental market. Information from the English Housing Survey shows one-fifth of the population are tenants, which also includes nearly two million families who have children. This change from homeowners to long-term renters means there is even greater demand for good quality, rental accommodation throughout the UK.
With rents increasing and property values going up, landlords can still enjoy a successful career, as long as they keep on top of existing rental regulations and new ones. New bills are working their way through parliament to improve rental properties and stamp out rogue landlords. These include the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill 2017-19 and the new laws regarding Energy Performance Certificates. All of these changes will help to eliminate rogue or bad landlords, while raising standards in the rental sector.
Professional landlords can ensure they stay on top of any new rules, regulations and tax changes by using software to make sure that all properties meet the required standards. Despite these changes, which mean additional expenditure for landlords, it is still a good time to be a landlord in the UK. Across the country, there are excellent opportunities for investment and the rise in demand for quality rental properties means void periods are kept to a minimum.
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