With some private landlords leaving the sector, Patrick Mooney, news editor of Housing Management & Maintenance explores the issues.
The housing phenomenon since the turn of the century has to be the rampant growth of the private rented sector, but for how long can this increase keep going on for and are its tenants properly valued?
The most recent figures from the English Housing Survey shows us that the private rented sector accounts for 4.7 million, or just over 20 per cent of all households across the country. In London, private renting was the most prevalent form of tenure at 30 per cent
This means the private rented sector has more than doubled in size since 2002, during which time Governments of all political shades have been in power. The period is also characterised by an ageing domestic population, boosted by record numbers of younger migrants to fuel our growing economy and labour force.
“While demand for private renting continues to grow, the numbers of properties available is showing signs of stress.”
However, the needs and aspirations of private tenants are often overlooked in the heated debate over how to make housing more affordable, how can home ownership rates be boosted and can we take the stigma out of social housing. Instead the private rented sector is characterised as being dominated by rogue landlords who are ripping off the state, while making vast fortunes on the back of rising property values.
And yet politicians and policy makers who overlook this group do so at their peril.
Private tenants tend to be younger, are more likely to be in employment and they are increasingly bringing up families in rented homes.
This is the Brexit generation who are leading a revolution in how shopping for services and goods is conducted on-line, rather than in shops or offices.
They are also becoming more difficult for political pollsters to predict how they will act and vote.
The under 35s have always been over-represented in the private rented sector, but over the last decade the increase in the proportion of such households in the private rented sector has been particularly pronounced.
In 2006/07, 27 per cent of those aged 25-34 lived in the private rented sector.
Ten years later in 2016/17 this had increased to 46 per cent. In the same period, the proportion of 25-34 year olds in owner occupation decreased from 57 to 37 per cent.
Households headed up by someone aged 25-34 years old are more likely to be renting privately than buying their own home, a continuation of a trend first identified in 2012/13. But significantly 60 per cent of private renters (some 2.7 million households) say they expect to buy a property at some point in the future.
Perhaps not surprisingly this is also the most economically active group in the population, with three quarters (74 per cent) of private renters employed, with 63 per cent in full-time work and 11 per cent in part-time work. Smaller proportions of private renters are retired (nine per cent), in full-time education (six per cent), or unemployed (four per cent).
They have a buying power which is informed by the web and conducted over the internet. They are more likely to change their bank, where they shop and who they buy telephone and other services from, than their parents ever were.
There are lessons to be learnt here too for landlords as this generation has quite different expectations from previous generations.
Smart homes with connected services all controllable and accessible via the internet are now being asked for more and more.
These younger tenants are also more switched on in terms of their impact on the environment, so recycling facilities, renewable heating, cycle storage, car charging and even photovoltaic power generating systems may now be something that a landlord needs to look at offering.
In the ten years between 2006/07 and 2016/17, the number of households with dependent children in the private rented sector also increased by about 966,000.
Over the same period, there was a corresponding decrease of 1.0 million in the number of households with children who are buying their home with a mortgage.
But landlord groups and letting agents are warning that while demand for private renting continues to grow, the numbers of properties available is showing signs of stress.
A growing number of buy-to-let landlords are cashing in and selling up, as they are increasingly wary of the growth in regulations and changes in taxation.
Recent figures from ARLA Propertymark reveal rises in the number of landlords selling properties at their highest level since 2015 with the highest numbers of landlords leaving the sector in London and Wales.
Last month, it was reported that landlords are offloading 3,800 buy-to-let properties a month, possibly bringing an end to almost two decades of sustained growth.
Andy Golding, chief executive of OneSavings Bank, said:
“Political opinion may be set against the private rented sector, but without it, the housing crisis would be deeper still.
“A housing market with dwindling supply of rental accommodation yet growing demand would provide the worst of all worlds for tenants: higher rents, with less choice and security, hampering their ability to save to buy a home.”
It will be fascinating to see how the Government responds to this news in the coming months.
Patrick Mooney is news editor of Housing Management & Maintenance