Know Your Housing Market
Landlord Know Your Housing Market: With the government seeking to tip the balance towards owner occupiers and away from buy to lets the prospects appear to be relatively unfavourable for landlords.
Understanding the housing market and demography should influence everything private landlords do when planning future investments; everything from population change, housing standards and government policy should inform your next property investment.
Here is a mixture of key points of information from the latest English Housing Survey, commissioned by the Department for Communities and Local Government
• There are an estimated to be around 22.8 million households in England. No one knows the exact number of course, but of these, it is estimated around 14.3 million are owner-occupied, making up 63 per cent of the market – a figure where home ownership is policy for the government – is down from its peak of 71 per cent in 2003, and the figure has remained unchanged for the past three years.
• The private rented sector has increased in size the most. There are now estimated to be 4.5 million households renting privately in England, up from 2.4 million in 2005-06 – an increase of 47 per cent. In comparison, the social housing sector (SHS), which was bigger than the private rented sector (PRS) until recently, has declined 3.9 million households rent social housing.
• The proportion of 25 to 34-year-olds renting privately has nearly doubled in 10 years or so, from 24 per cent in 2005-06 to 46 per cent in 2015-16. The average age for private renting is therefore the lowest of all forms of occupation at 40, which compares to 52 for social renters and 57 for owner-occupiers.
• As might be expected, private tenants move about the most. The average time in their current rental home is 4.3 years, which compares to 11.6 years for social renters and 17.8 years for owner-occupiers.
• 73 per cent of private tenants ended their last tenancy themselves, while 11 per cent of tenancies were ended by the landlord or agent. Of the tenancies ended by the landlord, 63 per cent were because the landlord wanted to use or sell the property.
• It is estimated that 28 per cent, more than a quarter of all private rented homes failed to meet the Decent Homes Standard in 2015. This measure sets minimum requirements on a property’s state of repair; its facilities and services; its energy efficiency and heating; and its health and safety standards. In comparison, 18 per cent of owner-occupied homes and 13 per cent of social rented homes were not up to scratch.
• Nearly three-fifths of private renters (59 per cent) aim to buy in the future, which compares with 27 per cent of social renters. Affordability (the means to provide a big enough deposit) is the main reason private tenants do not expect to be able to own a property.
• The vast majority of the UK’s private rented housing stock is owned by landlords with just a single property – small-scale landlords. Over 93% of landlords in the UK have a single rental property and together they account for 81% of privately rented stock, that’s according to analysis.
• In the year ending 30 June 2016 the estimated population of the United Kingdom increased by an average of 1,475 per day – a total increase in the year of 538,500. This equates to a small town of 10,355 people being added to the country every single week.
• If the UK average of 2.3 people per dwelling is maintained into the future, 641 new dwellings per day would be needed to house 1,475 people, says the report.
• If the population continues to grow at the rate of over 500,000 a year, as the Civitas report forecasts, by 2039 there will be just under 10 million (9.7m) more people living in the UK – that’s enough, says the report, “to populate Greater Manchester three times over”.
• Even if Brexit results in a much more restrictive immigration policy, given the current trajectory, it will be at least 10 years before any reduction in population works its way through the system – as the Civitas report states, policy changes take at least 10 years to have any significant impact. So, the result of any changes made now will not be seen much before 2030.
As landlords are increasingly in the Government spotlight and having to deal with further regulations, hardworking property professionals, who are qualified, skilled and client-orientated are here to assist.