To keep up with the growing demand, Britain’s private renting sector would need investments of £1.4 trillion by 2035, specialist buy-to-let mortgage lender Landbay projects. This forecast is based on the assumption that rents will continue to grow at a rate close to the average of the past decade (4.4 per cent) and house prices […]
To keep up with the growing demand, Britain’s private renting sector would need investments of £1.4 trillion by 2035, specialist buy-to-let mortgage lender Landbay projects.
This forecast is based on the assumption that rents will continue to grow at a rate close to the average of the past decade (4.4 per cent) and house prices do not change much.
If home prices were to continue growing by the average rate measured since 1990 (5.1 per cent), the sector would require investment of the whopping £4 trillion by 2035, according to Landbay estimations.
The lender sees the number of private rented properties increasing to 13.2 million in 15 years. In 2012, that number was 4.9 million.
The reason for the expected strong growth in rented housing is directly linked to the rising UK population, which is seen at the level of 73.3 million by 2035, or by 9.6 million more than today.
There gap between demand and supply in the housing sector is likely to widen as housing construction would most probably miss the target of 240,000 new builds per year. This target should be hit if supply were to keep up with expected demand.
John Goodall, co-founder and CEO of Landbay, comments:
“A substantial amount of new investment is needed to provide homes that will be needed over the next two decades, particularly if those homes are to be high quality homes that people want to live in.
“The UK’s housing stock is under significant pressure because not enough new houses are being built, the population is growing and people increasingly prefer to live in smaller, high quality dwellings. The scale of the investment needed to ensure the sufficient supply of high quality properties means that multiple solutions are needed – from build-to-let by pension funds, the government’s own ‘Build to Rent’ scheme, further housing debt guarantees from the UK government, through to continued investment by private landlords themselves and an active and vocal private rented sector taskforce.
“We are gradually moving towards a more European model of housing – where home ownership sits comfortably alongside an equally aspirational population of tenants. In countries such as Germany, where more than half the population live in private rented accommodation, this has been entirely consistent with improving living standards.
“So long as the UK can find the necessary investment and the most appropriate reforms, a growing private rental sector has many benefits. Renting offers insurance against house price corrections and greater flexibility and mobility in an evolving jobs market.”
