The private rented sector could overtake homeownership as the UK’s dominant form of housing in the future, new research from Savills has claimed.
A combination of cultural and economic factors will be behind the switch while Savills predicts the number of private rented households in England and Wales will grow by 1.2 million by 2019.
Such growth would see the number of rented homes top the six million mark – some 24 per cent of the national total.
While the rented sector grows, the number of owner-occupied homes is expected to fall by 200,000 to 14.67 million – 59 per cent of all households. These figures suggest that homeownership will remain the leading part of the housing market for some time yet, but Savills revealed that views towards owning a home are changing.
The younger generation in particular prefers to rent, and as they get older it is likely to mean that homeownership is no longer viewed as the norm.
Two-thirds of all households where the primary resident is under 35 years of age will be rented by 2019, equating to around 2.8 million homes – half a million more than the current figure.
Savills also predicts strong growth in the 35 to 49-year-old age bracket, with rented property in this sector expected to increase by 30 per cent or more than two million properties.
The rise in renting is expected to be most pronounced in London as an extra 250,000 households is expected to be rented by 2019. Rented housing would therefore account for 36 per cent of housing in the capital while owner-occupied properties are forecast to fall by 100,000 to 1.46 million and representing 42 per cent of London’s homes.
The cost of living also has a large influence on people’s decisions to buy or rent, the report claims as the number of people who can afford to buy is shrinking rapidly. These findings agree with a study from Ocean Finance that revealed many Brits between the ages of 25 and 34 are increasingly pessimistic when it comes to home ownership.
Among the reasons for the increase in buy to let are population growth, rising property prices, low wages and recent changes to mortgage lending criteria. While homeownership will remain the dominant force for some years yet, market trends suggest that renting could eventually overtake it to become the frontrunner.
See more buy to let news where One in five UK properties is owned by landlords.
14th November 2014