New research has shown that the buy to let property boom is set to continue, and even more families will have to rent if the economy does not improve.
In 1994, just 7% of the population were renting privately. A study conducted by the Resolution Foundation for housing charity Shelter has suggested that the number of people in private rented accommodation could rise from 18% to 22% by 2025.
The biggest increase in families moving to rented accommodation was between 2007 and 2010, when numbers doubled.
London rents continue to rise, and are now at a level where some households are spending more than half of their monthly household income on rent. Previous research by Shelter has suggested that households spending more than 35% of their income on rent would be likely to struggle financially. Despite this, Shelter believe that more families will be living in private rented accommodation than in mortgaged homes ownership in London by 2020.
The cost of buying property, and the vicious cycle of high rents leaving little excess to save for a deposit, continues to fuel the BTL market.
The chief executive of Shelter, Campbell Robb, said “This report shows what is fast becoming the new reality of our housing market in the current economic climate: home ownership continuing to fall while renting becomes a way of life for British families, yet despite the growing pressure on the rental market, the government’s recent housing strategy virtually ignored the sector and did little to address the issues of affordability, stability and quality that so many renters face. It’s time government woke up to the fact that rental Britain is here to stay.”
The findings of a separate study by self storage company, Safestore, shows that half of adults do not believe that they will ever own their home. More than 40% of those surveyed believed that they would only become home owners if they inherited money or a house.
Those surveyed cited lack of deposit (29%) and lack of mortgage availability (17%) were to blame for keeping them from buying a home.
Chief executive at Safestore, Peter Gowers, said “At a time when people are continuing to struggle to make their first step onto the property ladder, we are seeing more and more people moving into rented accommodation. The results show a large proportion of the population is resigned to never owning their own home and believing that their best hope of ownership is through inheritance.”