The buy-to-let property market has seen several changes over the last few years, but what are the upcoming key trends, and how will they impact the market?
Here are the key trends that will dominate the private rental sector over the next five years…
5 Key Trends Dominating the Private Rented Sector
- The Renters’ Reform Bill abolishes ‘no fault’ evictions, Section 21
The Queen’s Speech announced that the use of “no-fault” evictions, known as “section 21,” which gives landlords the ability to remove tenants without reason, will be abolished.
Without Section 21, landlords will be required to go through the courts to gain possession of their property, where there is a legitimate reason.
Although the move was welcomed by renters’ groups, the risk is that this change may drive away respectable landlords and increase the rental shortage.
- Home ownership rates are declining
The current trends indicate that home ownership rates have declined recently.
The main reason is the ongoing difficulty in saving for a deposit to buy a home. Currently 71% of young families state that the main reason they are renting is due to not having a mortgage deposit.
Interestingly, only 41% of Millennials stated affordability challenges as the reason they are chose to rent.
- Many tenants expect to continue renting in three years’ time
According to a multi-housing report, 69% of tenants still expect to be renting in three years’ time.
This number increases to 93% for the Baby Boomer generation, with a significant number of retirees switching from home ownership to renting.
Their reasons include:
- Not wanting to pay the high stamp duty fees
- Freeing up cash to help family members get into property
- Creating a new source of income from their home
- Choosing a flexible, city-central living lifestyle
- Affordability is the key driver for tenants
Up to 61% of tenants stated that affordability is the main priority when deciding which property to rent.
One of the benefits of renting was being able to live in an area they may not otherwise be able to afford.
The next drivers for choosing a rental property was location followed by the size of the property.
Interestingly, tenants are more focused on the ‘internal’ benefits of the property (such as the size of rooms, the amount of light) compare to the ‘external’ factors (such as proximity to transport or local shops).
- Middle-aged workers are the largest tenant group
In 2017, young professionals (aged 25-34) were the largest group living in private rental accommodation. However, they have been overtaken by middle-aged workers (aged 35-49).
This age group states that the challenge with saving a mortgage deposit is the biggest setback to buying a home.
The other main reason for this trend is that this group are more likely to become “accidental renters” after a relationship break-up. If a marriage or long-term partnership ends, this middle-aged group is more likely to find homeownership unaffordable.
The Next Steps
With the uncertainty of how the Renters’ Reform Bill will really impact the number of available rental properties; it can be challenging to decide whether now is the right time to buy or rent.
If you are thinking about buying or renting a property, then we recommend you seek professional advice, so you can make a considered decision.
At REKA Property Management we give our clients the facts about the property industry.
If you want to rent quality affordable self-contained studios, rooms with ensuites, houses, flats and apartments in North, South, East and West London, then contact us on +44 (0) 203 286 6468 or email us at lettings@RekaProperty.co.uk.
P.S. Please share your comments below. Where do you currently live? How long have you been renting? Where do you want to live? I would love to know your experiences and thoughts on this topic. I hope our paths cross again soon.