The rental market in the UK is closing the gap on mortgages as more people than ever are renting private accommodation.
Accordingly, the amount spent by tenants on rent, even since the turn of the century, has grown at a rate that far exceeds that spent on mortgage payments.
Since the year 2000, there has been a 345% increase in rent money paid out to private landlords. In the same period, there was a 62% rise in mortgage payments. The rental market looks set to continue its massive momentum too. More than two-thirds of the country’s 17 million privately renting tenants have no designs on taking on a mortgage at any point.
The spiralling cost of housing and mortgages has played a part in this monumental shift in attitudes toward property in the UK. The average price of a house in the UK as of June 2018 stands at £228,384.
For buy to let landlords the rental boom is a profitable and stable one. In 2017, the amount paid out by tenants to landlords hit a record £51.6 billion. That figure was an increase of £1.8 billion on the figure in 2016, and more than double the £22.6 billion paid out ten years prior.
The number of private landlords in the UK stands at around two million; that number owning around five million properties between them. Buy to let investors will find their tenant base and portfolios growing with each passing year thanks to rapidly increasing house prices.
First-time buyers are finding themselves locked out of the market before they can even consider making a purchase. The average price expected of first-time house buyers in the UK in 2017 was £207,693. That is an increase of 50% on five years prior. In real terms, that’s an increase of £1,150 per month for 60 months. It is an unrealistic expectation in an economy that lags when it comes to wage rises against inflation. It is perhaps the primary factor in the rental market becoming so prosperous and booming.
Private renting is a far more lucrative enterprise than council tenanting. The average weekly rent proffered by a private tenant hit £192 per week in 2016/17, compared to the £102 per week paid out by tenants in the social and council sector.
A large part of the steep growth of the rental market is based upon changing social attitudes too. The rapid rise and return of city centre living in the UK, for students and young professionals, has changed how properties are used and regarded. Without wanting to be tied down to a mortgage in the suburban and outlying areas of a town or city, a vast portion of private renters prefer access to transport links and the amenities that city centre living brings.
Furthermore, it isn’t just the millennial demographic that are looking to rent. More middle-aged people in the UK than ever are turning to private renting as means of living.
For buy to let landlords it means that there is a bigger spectrum of potential tenants than ever. Buy to let properties, such as that sold by leading property firms like RW Invest, are inundated with enquiries from potential tenants as soon as they are purchased and made available. With renters looking for more than ever for their money, the demand for high end, luxury accommodation in regenerated and prosperous cities like Liverpool and Manchester shows no sign of abating.