GROWING NUMBER OF FAMILIES CHOOSE PRIVATE RENTED HOMES

Published 02nd Jun 2008

Rents continued to rise in April as tenant demand for private rented properties grew. Rents have risen nearly 14% over the last year to stand at £12,048 in April, having just broken the £1,000 a month barrier in March, according to Paragon’s latest buy-to-let index.

A key contributory factor to the buoyancy of rents is that the private rented sector is no longer just the tenure of choice for twenty-somethings, but increasingly provides homes for people in their thirties and forties with families. According to a separate Paragon survey of landlords, the average age of tenants has reached 32.8, from 31.0 at the start of 2007.

The profile of private rented tenants has been changing for some years. With the rising standard of accommodation in the private rented sector and home ownership being less affordable, people have increasingly seen private rented accommodation as providing a suitable long-term family home. Previously rented homes were largely perceived as a stop-gap until such a time as people could afford to buy.

The Communities and Local Government’s annual housing statistics report confirms this trend. In 2002, when the report began, 23% of tenants in the private rented sector were couples or single people with children. By 2007, this figure had risen to 28%.

John Heron, managing director of Paragon Mortgages, explains: ‘We have known for some time that the tenure of the UK is changing as a growing and more diverse demographic are choosing private rented homes - the percentage of households living in private rented accommodation rose from 10% in 2002, to 12% in 2007. There is no doubt tenant demand is following an upward trend.

‘But the recent lack of mortgage availability for potential first time buyers, as well as a fall in confidence in the housing market has caused more people to stay in private rented homes for longer. If the situation doesn’t improve for first time buyers, we will soon arrive at levels of demand for private rented homes that we previously wouldn’t have expected to see for many years. The trend is definitely accelerating.’

And with rents rising and investment property prices beginning to cool - by 0.5% over April - landlords’ yields look set to rise above their current level of 6.3% if tenant demand continues to grow.

John Heron concluded: ‘With buying opportunities for landlords presenting themselves as house prices moderate, we expect to see further expansion of the private rented sector over the next couple of years.’

Source: ' Telegraph '

View All Latest News