Property Renting Set To Be Way Of Life For Young Families

Friday, June 15, 2012
UK Set To Become A Rental Nation

UK Set To Become A Rental Nation

A new report warns of steep increases in the number of parents unable to buy their own homes meaning millions of young families are entering an era of insecurity in which renting property becomes the norm.

The Cambridge University study, commissioned by the independent Resolution Foundation and the housing and homeless charity Shelter, says that if the British economy remains stagnant,  27% of the UK’s population will have a mortgage on a residential property by 2025, compared with 43% in 1993-94 and 35% in 2012.

It is no longer just young, single people who are locked out of the UK property market and forced into the currently under-regulated private rental sector (PRS) due to rising property prices, falling incomes and banks that are unwilling to lend.

The same difficulties are now besetting families with children, many of whom are paying half or more of their income in rent and, as a result, have little or nothing left at the end of the month to save for a deposit.

Over the past five years, the number of families with children having to rent property has soared by 86%.

The new report predicts that the trend away from home ownership towards renting in the UK private rented sector will continue for more than a decade unless the UK economy picks up rapidly.

The increase in the proportion of families renting privately will rise from 25% now to 33% by 2025. Overall, it predicts that more than 36% of British households will be renting by 2025. This can only be good news for landlords who have Rent Guarantee insurance.

Campbell Robb, Chief Executive of Shelter, said “The study showed government must acknowledge renting is fast becoming a way of life for the majority of British people. We want the government to do far more to encourage investment in the private rented sector and to protect the rights of those who are unable to buy, after a period of cuts in funding to the social housing sector and as household numbers rise.”

Tenants have complained of various problems in the UK property rental market, including uncertainties over rent levels and the sense that tenants feel like they lack a permanent home.

Prior to the commencement of a tenancy, letting agents and landlords can make discretionary charges for tenant referencing, rental property inventories, tenancy agreement fees, and even unspecified “admin” fees.

After moving in, many tenants complain about the time taken to carry out repairs, and the way many landlords fail to give the statutory 24 hours’ notice before visiting the property. Some tenants also report problems recovering their deposit in full when they move on.

“This report shows what is fast becoming the new reality of our housing market in the current economic climate: home ownership continuing to fall while renting becomes a way of life for British families. Yet despite the growing pressure on the rental market, the government’s recent housing strategy virtually ignored the sector and did little to address the issues of affordability, stability and quality that so many renters face. It’s time government woke up to the fact that ‘rental Britain’ is here to stay,” said Mr Robb.

Housing minister Grant Shapps said he did not believe home ownership was in irreversible decline. But he accepted there was a generation of young people, many with children, who were struggling to get a foot on the housing ladder. “The housing crisis – which has been decades in the making – has led to a crunch situation in which an entire generation is boxed in. As a result, the government have announced a series of measures to help people enter the market and boost the provision of homes”.

These measures include a scheme agreed with the Home Builders Federation (HBF) and Council of Mortgage Lenders (CML) to offer loans of up to 95% of the value of the home on newly built properties in England, to support 100,000 households.

The coalition government’s housing strategy also involves “build now, pay later” deals for property developers, and the release of enough brownfield land to create 100,000 new homes and up to 200,000 new jobs.

Last November, ministers announced a review by the businessman Sir Adrian Montague into how to encourage institutional investors such as pension funds to get more involved in the private rented sector. The report is expected to be delivered to ministers this month.

This was written by Mike Clarke. Posted on at 9:00 am. Filed under Landlord News. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.