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The Rise and Rise of the Rental Market

Nia Williams

April 28, 2015

Tony Ward is president and CEO of Clayton Euro Risk

 

A few surveys have come out recently about the current robustness of the rental sector.

Yesterday, Knight Frank reported that its Home Counties rental index rose 3.5% in the first quarter of 2015, its highest rate of quarterly growth in nearly four years. The number of tenancies agreed across the Home Counties is up 18% compared with 2014.

Last week, the Office of National Statistics reported that private rents in Britain rose by 2.1% in the 12 months to March.

Unsurprisingly, London recorded the steepest increase followed by the South East and the East. Reed Rains and Your Move estate agents also reported similar, suggesting this week that average rates in England and Wales had grown by 15% since the 2010 general election, from £667 a month to £768.

Noticeably over the same period, consumer inflation had amounted to 11.6%, so somewhat of a mismatch.

So what are drivers behind this data?

You could attribute increased demand for rental down to, in the short term, concerns about reforms post-election.

However, more worryingly, other commentators suggest a different trend.

Figures from the Halifax show that the numbers of people saving for a deposit had fallen as more young people give up on buying a home and settle for a life of renting.

This isn’t sounding great for would-be first-time buyers looking to save a worthy deposit towards buying their first home.

In fact, it looks downright miserable.

While there are schemes out there aiming to help the first-time buyer, are we as an industry doing enough to promote them?

Craig McKinlay, mortgages director at Halifax, noted that “the fact that consumers’ ability to raise a deposit remains the greatest perceived barrier to home ownership shows there is more work to be done in terms of letting people know what support is now available”.

I agree wholeheartedly.



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