Around fifteen per cent of UK Housing is rented. Even though it is estimated to rise to 25 per cent by 2025, it is lower than the rest of Europe which is an average of 30%.
Private landlords opting for letting their properties cover the major portion of the sector. People interested in making ‘letting’ as their business, investors looking for options to secure their annuity and accidental landlords share the other half of the property sector.
Size of the property does matter in the current property market, as rent is usually determined by the number of rooms. The majority of the rented properties are usually small: 1/3rd of the properties privately rented are flats and the rest are mostly terraced or semi-detached. Demand is rising, to some extent due to the rise in property prices (more than earnings) over the past decade and partially due to change in the standard of living (way of life) of the current generation.
‘High demand for Rented properties’: a fluctuating financial market makes renting an option which is flexible and adaptable.’
The private rental sector lets over 5 million properties to twenty to twenty five-year-olds which covers around 50%. Many of them are working singles/couples who either can’t or don’t wish to buy into the property market and value the sense of liberty that comes with renting: if they are willing to move on, they can do it fast and easily. Further aspects driving tenant demand are increase in the number of students and demand from first-time buyers unable to step up on the housing ladder. Increase in immigration has also had an impact in certain areas in the UK.
The Positives and Negatives
+s Property has proved to be a better investment than equity investments or returns from a deposit. Letting offers a guaranteed rental income and the advantage of growth in property value.
-s Property prices can fall as well as rise & the landlord is responsible for property maintenance. They also have to find tenants or pay an estate agent/property firm to assist them. It is very important to consider property investment as a long-term business venture. A higher % of the earnings is from the rise in value, as opposed to monthly rent profits.
Buy-to-let mortgages (around 1.7 million in the UK) have also encouraged people to invest in the letting market. These are intended for those who buy property particularly to let out to tenants.