With a whole new decade nearly upon us, now seems as good a time as any to look back on the last 10 years and see how Britain’s private rented sector has fared.
Paul Sloan, operations director for haart, the UK’s largest independent estate agent, said while there’s a lot of pessimism about the private rented sector – with sometimes landlords themselves joining the chorus – there is actually plenty for the sector to cheer.
“A look at trends over the last decade, rather than the last month or year, show there’s been a period of expansion, growth and profit for Britain’s vital private rented sector,” Sloan said.
Although the recent perception is that disgruntled landlords are exiting the rental market thanks to increased regulation and stunted profits, haart argues this isn’t true – at least not when you take the longer view.
According to HMRC, the number of landlords has risen from 1.97 million at the start of the decade to 2.5 million now, an increase of nearly 27%.
This coincides with a noticeable increase in renting as a necessity or lifestyle choice, with the number of private tenant households in Britain shooting up in the last decade, according to figures from the Office for National Statistics (ONS).
While 16% of households were in the PRS in 2010, this figure is expected to be more than 20% by 2020, with an even higher rate in London, where renting is now the largest form of tenure.
The increase in demand has also led to monthly rents rising significantly, particularly in London, tenant and landlord insurance firm HomeLet states.
In the capital, rents have risen across the decade by a massive 77%, up from an average monthly rent of £940 a decade ago to £1,665 now.
Outside of London, the average monthly rent has grown by more than 27%, up from £619 at the start of the decade to £788 now.
House prices, meanwhile, have increased across Britain since 2010, from an average of £167,496 in 2010 to £235,000 today, according to the ONS. That’s growth of 40%, significantly more than rental increases in most of Britain across the same period.
The result, of course, is that fewer young people can afford to purchase their own home, with the follow on from this being that many of them are spending much more time in the rental sector than their parents did.
Some 55% of 25-34-year-olds were homeowners in 2010, but by 2020 that figure is expected to have plummeted to 38%, according to the most recent English Housing Survey.
“With a new decade just around the corner there will undoubtedly be fresh challenges for the private rented sector,” Sloan said.
“But if we look back over the most recent decade, this sector is clearly a powerful and growing force; providing millions of homes to people who through choice or circumstance are just not ready for the expense, the permanence and the stress of a big, hamster-wheel mortgage.”
He added: “The message from all this data is clear – the private rented sector can be a place of great opportunity and growth for both landlords and tenants when a reputable letting agent is used to minimise hassle for both.”