I was reading a report the other day produced by Halifax,
regarding the UK property market and why more and more of the younger
generation seem to be renting rather than buying. I find it fascinating that
over the last ten years, the British obsession of buying a house almost as soon
as you have left school as well as the belief that renting meant you were a
second class citizen, has turned on its head to the point where the hopes and
dreams of owning a nice home have been replaced by the ambition to simply
living in one.
In the not too distance past, in the 1990’s, one left school,
got a job, bought a small house and kept buying and selling property, moving up
the property ladder until retirement. However, the property market has changed
and there is no longer a stigma associated with renting in the UK indeed people
are beginning to accept a lifetime of renting. This is a very important
consideration for both Solihull home-owners and landlords as it will transform
the way the Solihull property ladder looks in the future and whether or not it
will exist at all for some people. The make up of households is an important
factor, especially in the Solihull property market. The normal stereotypical married
couple, two children and dog of the 1970’s and 1980’s has changed. More and
more we have the need for larger houses where two families come together as a
result of an increase in the number of divorces as well as an increase in the
number of one person households.
Looking at the data for Solihull, of the 7,795 private
rental properties in the Solihull Borough Council area, 31.25% (2,436
properties) of those rented properties are one person households. However, when
we compare the number of one person Solihull households who have bought their
own property with a mortgage, of the 63,559 owner occupied households in the
area, only 4,516 of those properties are a one person household (i.e. 7.10%). This recent explosion in demand for decent
high quality rental properties for one person households has not been met with
an increase in supply of such properties.
More and more I believe Solihull landlords need to consider this change
in the make up of Solihull households, as I believe this could be an
opportunity. Another interesting statistic
that raised an eyebrow is 21.82% of those 7,795 rental properties (1,701
properties) are lone parents households.
It is true that the
Governments introduction in 2013 of the Help to Buy scheme, where first time
buyers only needed a 5% deposit, changed the perception of peoples’ ability to
buy without having to save ten’s of thousands of pounds for a deposit. However,
it might surprise you that 95% mortgages were re-introduced within six months
of the credit crunch in late 2009, so again it comes down to people’s own
perception. Many youngsters think they won’t get a mortgage, so don’t even
bother trying.
It’s still a fact
that once you start renting it becomes that much harder to save for a deposit regardless
of the size; interestingly seven out of eight renters polled by Halifax
refuse to sacrifice the quality of accommodation they currently live in to
reduce the amount of rent they pay in order to save for a deposit. This
is the crux and the real reason why people aren't buying but renting and why
demand for renting will continue to grow in the future, which is great news for
landlords. Solihull tenants can upgrade the quality and size of the
property they live in for a minimal rent increase. If you had to make that jump
when buying, the monthly mortgage payment increase would be considerable more. Without any social pressure and better quality
rental properties compared to a decade ago, the next UK generation will become a nation of renters , as the UK
becomes more like Europe where renting is ‘the norm’. Who is going to supply
all these properties to rent? Landlords!
Whether you are an existing landlord looking to grow your
portfolio or looking to become a ‘first time landlord’, my thoughts are take
advice from as many people as possible. However, as the majority of landlords buy
their buy to let properties in the same town they live, you will need specific
advice about Solihull itself. For such advice please email me jane.morcom@centrickproperty.co.uk
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