UK Growth in the Private Rented Sector
Between 2001 and 2011 the number of households renting privately rose in the UK by 2 million to 4.3 million.
This structural shift in the housing market, which started in the early noughties and pre-dates the credit crunch, is set to remain. It is estimated that by 2018, one in five households, a total of 5.7 million in England, will be renting in the private sector, despite recent Government measures to boost homeownership. Key drivers point to continued demand for private renting in the long-term.
Despite the weak economy, the laws of supply and demand have driven strong rental growth over the last few years. Population growth adds pressure to the shortage. Projections by the Town and Country Planning Association (TCPA ) predicts that the number of households in England is set to rise by a fifth in the next 20 years to 27 million, creating a demand for some 245,000 homes a year.
Of these, nearly two-thirds will be needed in the south and nearly a quarter of all housing need will be in London. There is also a long-term growth trend in the numbers of 20 to 34 year-olds living in major cities.
In Birmingham, Leeds, Manchester, Liverpool and Bristol, the number of in the private rented sector has risen by 77% in the last decade.Renting may be largely an urban phenomenon, but it no longer applies solely to young people. High prices mean people rent for longer. Studies show that 23% of all households renting are headed by someone aged 50 and above.
The imbalance between supply and demand has pushed up rents in well connected city centres –the type of location most popular with private renters. Forecasts indicate that average rents in the mainstream market will increase by 18.2% by 2017, with the greater part of that growth delivered in 2016 and 2017.