More Households Choosing or Being Forced Into the Private Rental Sector

The need for private rental properties is increasing in demand.  According to data released in the Communities and Local Government’s English Housing Report, it reveals that one in six residential properties now rented privately.  This means that the private renting sector of the housing market is not only growing but is becoming a vital part of the UK housing market.

More Households Choosing or Being Forced Into the Private Rental Sector

Data from the report showed that the number of households in the UK renting has increased.  The increase is by 1 million households in only 5 years.  Numbers close to 2.4 million were renting in 2015-2016 and now in 2019-2020 reporting, there are 3.4 million.

In reporting households for England, 15.6 per cent of all households are a part of the private rental sector.  This is up from 14.2 per cent reported in 2018-2019 and 11.7 per cent in 2015-2016.  During the increase in private rental properties, there has been a decline in the number of households that report they are owner-occupied.

The proportion of households reporting as being owner occupied to those being rented has declined since 2017.  Over the past five years, the decline has gone from 70.9 per cent to 67.4 per cent.  Couples with no dependent children are the most common renters in the private rental sector at 26 per cent.  Single person households under the age of 60 come in second at 23 per cent.

The economic status of those in the private rental sector breaks down to 60 per cent employed full-time, 9 per cent employed part-time, 7 per cent unemployed, 8 per cent retired, and 11 per cent classified as “other inactive”.  This reveals that the majority of the renters are wage earners and not those that would be otherwise expected to find ownership unattainable.  Yet lending is restricted, and many cannot obtain deposits or pending approval.

There are a growing number of people that are dependent on the private rental sector of the housing market.  This is only expected to grow as lending tightens in a fragile economy and as more newly developed young families find it difficult to enter the property ownership ladder.  To meet growing demand lenders have been called upon to bring buy to let mortgage products that will help new landlords enter the market and successful landlords add to their portfolio.

Nigel Terrington, Chief Executive with Paragon and a buy to let specialist, said: “Demand for privately rented property is unprecedented and far outweighs supply. The resulting rental inflation is leading to people, including the most vulnerable households, being priced out of the sector at a time when the supply of social housing is in decline.

“With Capital Economics estimating that the private rented sector will be home to nearly one in five households by 2015, it is crucial that adequate levels of buy to let mortgage finance are available to enable landlords to expand the number of properties in the PRS.”

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