Younger people and families, particularly lone-parent families, are renting in increasing numbers in the private rental sector, rather than buying. The Department for Communities and Local Government has just released the English Housing Survey on the Private Rented Sector (PRS) 2015-2016, which shows the private rental sector remains the second largest tenure in England, having grown substantially in the past 10 years or so. In 2015-16, there were 4.5 million households renting in the private sector, which is 20% of all households in England. There are now 2.5 million more households in private rented accommodation than there were in 2000.
The proportion of younger people aged 25 to 34 in this sector has increased from 24% in 2005-06 to 46% in 2015-16. At the same time, there has been a corresponding decrease in this age group in the owner-occupier sector which has gone from 56% in 2005-06 to 38% in 2015-16. The proportion of households with dependent children in the private rental sector has grown from 30% 10 years ago, to 36% today. In particular, there has been a big rise in lone parents with dependent children in private rented accommodation, with an increase from about 229,000 households to 519,000 in the same period. This corresponds with a decrease of such households in the social rented sector.
The survey also shows that private renters spend significantly more of their household income on housing costs than social renters. However, they are less likely to be in arrears. On average, private rented sector households spent 35% of their income on rent, including housing benefit, while social renters spent an average of 28%. Interestingly, 25% of social renters had been in arrears in the previous 12 months, compared to 9% of private renters.
These figures are interesting when landlords are considering where to make their buy-to-let investments. Obviously younger people are increasingly going to have to look to rent rather than buy, because of the soaring costs of property compared to wages. More younger people will find they cannot afford to buy, particularly in the areas where they are more likely to find work, such as London and the South-East, or cities like Bristol or Manchester. Therefore, investing in buy-to-lets which suit young, single professionals or couples, and in areas of high employment, makes sound financial sense. Also, family-friendly houses close to good schools would be a wise move too.
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