We’re often told about the plight of generation rent, sad and abandoned in their inability to drag themselves on to the housing market meaning almost infinite purgatory in the private rental market.
Granted, this has been less of a focus for the media recently. It’s not surprising given that 2020 had, shall we say, bigger concerns to contend with.
What appears to have been lost somewhat over the course of the debate is that the tone applied so often implies that 100% of people renting their properties don’t want to and would rather buy. That’s clearly not true and although there’s no evidence to suggest what percentage are happy to rent, we can assume that it’s sizeable enough to drive demand in the sector in a way that it wouldn’t if everybody wanted to buy.
Mortgage acceptances are up for the early part of the year but not by any significant amount, so if mortgage approvals remain fairly steady then it’s quite possible that many simply don’t feel the need to apply for one.
If we break it down further, we might imagine that there are groups that are roughly made up of:
– Those saving for a deposit to buy later
– Those unable to afford to save for a deposit
– Those whose credit rating isn’t good enough to get a mortgage
– Those who are simply happy to rent
We can debate what size each of those groups represents, however, what seems to be evident is that private renters as a total group are growing in size year-on-year.
The reasons behind renting
When Knight Knox conducted a survey about why people rent, it showed that more than a quarter (26.1%) of people rent ‘because it suits their lifestyle’. This was even more likely to be the case among 18 to 24-year-olds. In this age group, almost half (47.2%) of respondents said they didn’t want to be tied down to a location.
Over-55s who continue to rent also enjoyed the way it fit better with their lifestyle (34.7%). Around a quarter said they didn’t want to maintain a property, and a similar number did not want a mortgage.
These numbers feel significant and absolutely contrary to the dominant media narrative that affordability has spiralled out of control leaving many young people unhappy.
Will renting continue to grow?
In an article for the FT, they looked at what to expect in the coming months and years from the rental market.
When considering growth in the market, they noted ‘Demand plunged by more than 55 per cent in the last three weeks of March. After springing back in April and May, however, it is now running at a startling 30 per cent higher than in early March.’
What we can say is that all the indicators we have so far are that the rental market will continue to grow at pace. The reasons for people renting privately are changing and they’re changing quickly.
Gone are the days where young people are obsessed with buying property, many are now happy that it suits their circumstances to rent their property, as are older renters.
Property prices aren’t likely to fall any time soon and so the same affordability issues will continue, but likely at growth and will work in parallel with growing groups of happy renters.
This will almost certainly mean a sustained increase in the market over the coming years and landlords aren’t likely to see a shortfall of demand any time soon.
