It’s not a particularly controversial thing to say, but for almost ten years now the gap between the demand for Private Rental accommodation and the desire to own a home has been slowly developing into a chasm, mainly because the requirement for a deposit for a house has been growing almost as quickly, into something unobtainable for many under 30’s.
As the average UK house price crept towards, and then exceeded the £250,000 mark, the normal requirement of a 15% deposit hit £37,5000 which for many isn’t something they can hope to achieve in less than a decade.
The average UK salary is currently just under £37,000, and according to Legal and General, “just under a third of people in the UK have less than £1,500 in the bank and 15% of people have no savings at all.”
With ‘Generation Rent’ growing quickly and struggling to find a deposit or even prioritise saving for one, the demand for private rented accommodation has grown significantly. But crucially, with the government bringing in a raft of new tax laws and requirements, many Buy to Let landlords have now left meaning that the difference between supply and demand is reaching crisis level.
The solution, on the surface at least, is for the government to announce measures in the budget in the Spring in which it encourages private landlords to return to the market, offering out good quality affordable accommodation for those who clearly need it.
New research by NAEA Propertymark has found that house hunters registered to estate agents have increased by 22% in just a month, signifying that people looking for rental accommodation are running out of options thanks to a lack of available stock.
This does, of course, lead to a rise in property prices and rents which is good news for those landlords still in the market and follows trends for growing rents across the UK and a broader picture of quickly recovering property markets.
The issue appears to be more pronounced in the London area, however, it is also a growing issue in cities like Manchester, Leeds and Sheffield. Rural areas are also feeling the squeeze in this regard as rental stocks tend to be lower in rural areas.
This leaves the question of what the government can do in order to stem this tide and encourage landlords back into the market to alleviate the pressure.
First and foremost, the government should look into ways to provide tax breaks for professional landlords that are providing reasonable cost housing with quality facilities. The previous issue of rogue landlords appears to have been largely abated by legislation designed to regulate the industry more fairly.
Now that has been achieved, there are many that believe these breaks and incentives will come in the budget. It certainly helps that the industry has been ticking along quite nicely in the interim despite the knockbacks, and there’s certainly a feeling that a government hand could really boost Buy to Let and the Private Rented Sector.
2020 is likely to be the year of property, and this would certainly help it achieve that.