Research shows the growth of the PRS in UK
Interesting new research shows that in excess of two million homes have changed their tenure during the last decade, when taking into account the total number of property sales between owner occupiers and landlords.
The research, conducted by Countrywide plc, indicates that some 1.5million homes have changed from being lived in by their owner to be lived in by their tenant. 550,000 have switched the other way, moving from the private rental sector into owner occupation.
As a result, one million extra homes have been occupied by tenants, which is equivalent to the number of households in the North East of England.
Transferring
Homes that were transferred from owner occupation into the private rented sector made up half of the growth in the total number of rented homes during the same period. In addition, the investigation found that 700,000 new homes that have been built since 2005 have come into the private rented sector. The remaining homes that have changed tenure came from residential conversions and social housing.
First-time purchasers bought 65% of the homes that left the Private Rental Sector and during the last year, 45,000 first time buyers purchased a property from their previous landlord. This equated to 15% of those who got onto the housing ladder for the first time.
Given that the private rented sector is largest in London and the South East, these areas are where first timers are most likely to purchase a home from their landlord.
In these two regions, the difference between what new buyers paid when purchasing from a landlord and those that didn’t is highest. Those buying from a landlord spent on average 8% less than those that didn’t.
Research shows the growth of the PRS in UK
Growth
Johnny Morris, director of research at Countrywide, said, ‘the rapid growth of the private rented sector has to come from somewhere, while the tenure may change, the physical home remains.’[1]
‘The sector has been growing since 2005 but the number of home owners has fallen in each of the last 10 years,’ Morris continued. ‘The scale of shift in tenure shows that the current push from the Government to increase the number of homeowners is unlikely to be enough to reverse the decline.’[1]
Morris notes that, ‘although landlords and first-time buyers might not appear natural bedfellows, because they tend to look for similar types of homes they do end up selling to each other.’ He says, ‘many landlords face a choice 10 to 15 years after buying a home, between refurbishing the property or selling it. Those landlords who choose to sell up offer an opportunity to first time buyers willing to put some work into their first home, often adding to its value.’[1]
‘Rents grew by 4.8% over the year, supported by the imbalance between growing tenant demand and constrained supply of homes to rent. The usual seasonal factors are seeing small month on month falls as the summer rush continues to subside,’ he concluded.[1]
[1] http://www.propertywire.com/news/europe/uk-rented-property-sector-2015110911179.html
