Demand Vs. Supply

Demand for property in the rental market has been questioned of late with the National press suggesting that UK rental property demand had in fact dropped in the last 2 years, with ARLA property mark saying there were just 26 prospective tenants registered per branch in December.

These figures sit in stark contrast to our experience where demand still outweighs supply with demand for property in major cities throughout the UK still at record levels.

This trend is set to continue as perspective Landlords have now decided to refrain from entering the property market as increases in stamp duty and the reduction on mortgage relief has seen the cost of becoming a landlord in many cases prohibitive. This has left to a drop in stock available, in turn keeping pressure on prices, and demand.

Some say that with rates sat at an all time low and lenders once again beginning to respond by offering ever greater deals (Yorkshire Building Society offering a mortgage at a rate of 0.89%), it is cheaper for people to buy their property than pay rental rates. Lets put that into context though, with most mortgages deposits are required, the above example requiring a 35% deposit, and with real income dropping and house price inflation rising markedly over the past few decades affordability is an issue. Presently house prices according to the office for National statistics have risen 259% since 1997 with wages in the same period rising by just 68%. This means if we take our 35% deposit required by the Yorkshire Building society it would take a person saving 5% of their salary a year a staggering 24 years. So although rates are low the ability of people to save for these deposits has diminished keeping many would be buyers out of the market. This in return means all these people are still in the rental market looking for properties, where recently Landlords have been shying away from adding to their stock due to raised costs.

So how does this void get filled, well the answer in many areas has been the rise of Buy to Rent properties. These are purpose built properties, a little like hotels, where people can rent apartments for set periods. These properties are run by a company and not sold on to individual landlords, meaning that standards are maintained across the board with a product that offers the tenant maximum satisfaction. One company in this sector SDL group has said that their portfolio of B2R property is forecast to grow six fold by 2020.

All this looks set to see the rental market across the UK remain in rude health, and with a younger more mobile working generation, and a more accepting approach to the rental market akin to the European model, generation rent looks like it is here to stay for sometime to come.

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