November 20th, 2014.
A Look at The Current Rental Market
Welcome to Generation Rent.
That’s the moniker being worn by the millions of millennials, and subsequent generations, who are deemed unlikely to ever own their own home.
Numerous factors have contributed to this outcome, ranging from government policies, student debt, unemployment rates, and housing shortages, but the result of all of this is that the performance of the rental market has never been more fascinating.
So how is the rental market looking?
Well, in September of this year, rental prices fell in 8 regions of the UK, with 4 demonstrating an increase. These 4 regions were:
• Greater London – 0.1% increase
• West Midlands – 1.2% increase
• South West – 2% increase
• Northern Ireland – 4.2%
And whilst the average monthly private rent in the UK is now £728, the average monthly rent in London is £1,466.
Commenting on these findings, HomeLet’s CEO had this to say:
“There can be an element of seasonality to the rental market with September often recording marginally lower average prices than other months, perhaps due to the number of student letting agreements being signed at this time of year.
“However, with this month’s data being the second consecutive month of slower rental price growth, and house prices indices indicating a slowing of house price growth, which could suggest movement to a period of more settled rental prices, even in previously booming markets such as London and the South East.”
Underscoring the label of “Generation Rent” was a new survey from Knight Frank, which showed that nearly 25% of all tenants in the private rented sector believe that they will never own their own home. The survey also showed that:
• 25% of the 3,500 surveyed tenants expected to always rent a property
• 25% expected to leave the sector within two years
• 33% are renting because it suits their lifestyle, and/or they do not want a mortgage
All of this brings us back to the central question of this article: how is the rental market looking?
In answering this, Grainne Gilmore, the Head of UK Residential Research at Knight Frank, had this to say:
“The dynamics of the housing market, where supply has failed to keep up with demand which in turn has played a role in pushing up house prices, has also put home ownership beyond the reach of many young workers, especially in key employment hubs. This, coupled with an increasing mobile and flexible workforce, has led to rising demand for privately rented property.”
So despite the negative outlook for ‘Generation Rent’, it seems that for those with a portfolio of buy-to-let properties, the rental market has never been better.
If you need to discuss finance for your buy-to-let portfolio, get in touch with us today.