A growing number of tenants are not planning to buy and will probably rent for the long term, with little likelihood of buying a home. As letting agents experience growing demand, will there be enough properties?
38.4 per cent of tenants surveyed by The Deposit Protection Service said that they plan to remain in a rented home rather than buy property, The Deposit Protection Service (The DPS) has said.
Most of those who said that they do intend to buy a property said it wouldn’t be likely within the next 12 months. 25.5 per cent said they hoped to own within six months, but 62 per cent said they didn’t expect to within the next year.
The 1,000 tenants surveyed have their deposits registered with The DPS. Julian Foster, Managing Director of The DPS, said, “Renting is a vital part of the housing sector, and a significant proportion of the UK population choose to be tenants as it better suits their life plan or lifestyles.
“However, buying a house is a significant financial undertaking, and renting will often also suit those who are saving for a deposit before accessing a mortgage.
“The UK needs a flexible residential sector that suits the varied life choices and priorities of our diverse population, and the rental sector plays an important role in providing people with real housing options.”
Letting agents gear up for more business
Other research, carried out by The Royal Institution of Chartered Surveyors (RICS), has found that rising house prices will continue to make home ownership increasingly unaffordable and it is predicted that by 2025, 1.8 million more households will be looking to rent, rather than buy.
However, in a trading update today (23rd January 2017) Belvoir Lettings says that the Government’s proposed ban on tenant letting fees could lead to rising rental prices as buy-to-let landlords hesitate to increase their portfolios, leading to a shortage of homes.
Mike Goddard, Chairman and CEO said, “It is now clear that there is going to be a period of consultation ahead of the ban being introduced in 2018, which will determine whether there will be a complete ban on tenant fees or whether some recharges of specific costs will be permitted, possibly subject to a cap.
“Additionally, changes to the buy-to-let sector, such as more stringent mortgage lending criteria and increased taxation, will undoubtedly have an impact on the supply of new buy to let properties in 2017, increasing demand for rental properties and driving rents higher. As such, the rental sector is becoming extremely attractive, with the prospect of fewer void periods and higher yields. Exactly in line with the Board’s forecast in February 2016, rental values increased by 2 – 3 per cent across the UK. Outside of London, it is likely that rental values will increase by between 4 – 5 per cent in 2017.