Private renters outnumber homeowners for the first time in a decade
Data gathered from the Government’s English Housing Survey shows that private renters are now outnumbering homeowners for the first time in over a decade. In 2003/04 there were 1 million people living in mortgaged homes in the capital. This has dropped 17% down to 883,000, according to the data which was collected in 2014/15. In terms of renting, a decade ago there were 405,000 households in private rented accommodation, whereas this figure has now more than doubled and stands at 898,000.
The reason for the change in market is largely down to London’s soaring property prices and lower salaries which were impacted by the global recession. The average London home is now worth £536,000, having increased by 9% in the past year alone. A recent report by Price Waterhouse Coopers suggests that figures such as these create a certainty that ‘London will transform from a city of homeowners to a city of renters within a generation’.
Furthermore it is suggested that growing numbers of Londoners are giving up on home ownership as the proportion of private renters who had expected to buy property falls year upon year.
Great news for landlords
This is of course extremely concerning information for those who are struggling to get a foot on the property ladder in London. However, it spells excellent news for landlords who want to make the most of their property rental investments. There are more renters than ever before and many less homeowners, which includes landlords. This means that tenants are fighting for every property rental that comes on the market and there is little or no time where accommodation is vacant in between tenancies.
Tenants want longer contracts
Landlords who have properties in the lower price brackets are the most likely to do well out the current situation. As there is such a shortage for affordable rental accommodation, tenants are also keen to be tied into longer contracts and the average tenancy is now 23 months long. This ensures that they don’t have to suffer the nightmare of being evicted and having to go through the whole house-hunting process again on an annual basis. This is welcome news for most landlords as it means that equally they will have the reassurance that their rental income is constant and that there is less of a need for gaps in-between rental contracts.
Loss of communal areas
Tenants are becoming so desperate that they’re willing to sacrifice communal living space such as a living room. By doing so, they are able to squeeze more flatmates into a property rental which will bring down the monthly rental cost per person. This means that landlords are increasingly able to advertise their properties as 5-beds when they are in fact 4-beds with a living room.
For those that are cautiously considering the idea of becoming a London landlord, there has never been a better time to join the market. If you require large Buy-to-Let mortgages to fund your desired properties, then so long as the rent yields more than the monthly mortgage repayments, it should be fairly simple to turn your investment dreams into a reality.