In recent years, the landscape of the UK property market has experienced significant transformation fueled by various factors.
Since UK Prime Minister Margaret Thatcher famously set out to turn Britain into a “property-owning democracy”, successive Governments have prioritised home ownership over the rental market. Whether through Right to Buy or Help to Buy, the message has been that owning a home is the ultimate goal.
However, the market trends tell otherwise. Let’s explore the growth of the UK rental market and the market-leading investment opportunities it offers to investors.
Trends in the UK Rental Market
If we look at the data for the UK property market since the turn of the century, we see a rise in the rental market. With several compelling reasons to invest in UK property, the private rented sector is the fastest-growing tenure in the UK, and this rapid growth looks set to continue.
- Census data reveals the scale of the shift in the UK housing market, with the number of households renting in England and Wales more than doubling since 2001.
- 5 million households are now renting privately compared to 1.9 million in 2001, and home ownership rates have fallen from 64.1% in 2011 to 62.3% in 2021.
- The proportion of owner-occupiers is lower than it has been at any point since 1983, when Thatcher was beginning her second term as UK Prime Minister.
Reasons for the Rise in the UK Rental Market
Let’s explore the underlying reasons that have contributed to the growth of the UK rental market.
The rise of ‘Generation Rent’ is not solely being driven by younger renters, though, with more households aged over 35 living in rented homes than under-35 households. The number of middle-aged renters is rising rapidly, and the number of over 55’s renting has almost tripled in a decade, increasing from 691,000 in 2011 to 1.8 million in 2021.
Evolving Rental Sector
Looking at more specific markets, hotspots such as London, Birmingham and Manchester are going through a period of unprecedented sustained growth. Across the UK, rents have increased by an average of 11%, with this rising to 15.8% in London and over 23% in Manchester. In London, rents are increasing at their highest-ever rate and outside the capital, average rents have hit another new record of over £1,100 per month.
Surging Demand for Rental Properties
The return to offices post-lockdown, more overseas students returning to the UK, and companies completing relocations and office expansions put on hold during the pandemic have all caused the rental market to heat up in urban areas. On top of this, high-interest rates are driving up demand for rental properties by pricing out many first-time buyers.
Higher mortgage costs are not the only reason pushing would-be first-time home owners towards renting – it’s increasingly becoming a lifestyle choice. Renters are attracted by the freedom and flexibility it offers, alongside the benefits of living in purpose-built rental accommodation, with common perks like a gym, co-working space and resident amenities.
This is one of the leading reasons why buy-to-let investors are buying UK off-plan property.
Unlock the Potential of the UK Rental Market
With demand for rental properties up 6% and available properties down 26%, the rise of the rental market shows no sign of slowing and smart investors can achieve strong returns as rents continue to soar and renters continue to compete for the best homes on the market.
You need an expert UK property investment specialist to navigate the best market investment opportunities and make the most of bright horizon of the UK rental market.