Over a million new tenants to hit the market within 5 years
Government schemes and pledges for new affordable housing look set to fall short of meeting the ever increasing demand for housing in the UK.
Demand for rented accommodation has never been higher, but the current levels are nothing to what is being predicted for the next five years. Experts say that at least another million prospective renters will hit the market, pushing an already undersupplied housing sector to the limit.
This news comes despite the recent measures that have been introduced by the government that hoped to put home ownership back on the map and lower the amount of people currently in privately rented accommodation. Generation Rent, as they have come to be known, have wanted to become Generation Buy for some time now, but how can this happen when property prices continue to rise far quicker than the average Joe or Joanne’s wage packet?
New homes aplenty, but is it enough?
The government has committed itself to building around 400,000 new homes that it deems ‘affordable’ over the course of this parliament, but many think that this figure will barely scratch the surface with demand ever growing. In fact, the likes of estate agents Savills think that there will need to be an additional 220,000 properties made available for rent each year if supply is going to come anywhere near close to meeting demand.
The English Housing Survey bears this out. This paper showed that private renting rose by an astonishing average of 17,500 households every month from 1994 to 2014! The fear is that demand is actually growing further still, so to address the imbalance drastic action needs to be taken.
Things such as low interest rates and the much touted return to a more balanced economy after the collapse of 2007 and 2008 has done little to move people from renting to buying, mainly because of the continued capital growth that the property market is experiencing. The rise in property prices over the last five years has left many potential homebuyers stranded in the rental market, priced out of getting that all important first step on the property ladder.
Now, with the introduction of increased stamp duty charges and a reduction in tax relief for landlords, there are increasing fears of a rental market collapse as these landlords hike up rental prices in order to recoup some of the losses they will make. Large buy-to-let mortgages are available, but the buck will ultimately stop at those paying the rent.
Government schemes may not be enough
The raft of schemes and initiatives introduced by the government may prove to fall short, such is the demand for good affordable housing across the country. Shared ownership, starter homes and the now infamous Help to Buy London scheme are all well and good but many would-be buyers are still finding that buying their first home is way out of reach. However, now the concern is that the spiralling rents will also become unaffordable to them, and there doesn’t seem to be any real answers coming from those who are supposedly in charge.
While 400,000 affordable new homes are a great start, it is clear that the amount of property needed to accommodate those who will wish to rent over the next five years has to be drastically looked at too.