Leeds property news: 135 per cent rise in privately rented homes in last 30 years
The number of private rented sector homes has increased by 135 per cent over the past 30 years, according to new research by Martin & Co, the UK's largest lettings and property management franchise business.
The Martin & Co report shows a 346 per cent increase in the number of households aged between 35 and 44 in this sector. Seventy one per cent of households aged between 16 and 24 now live in a privately rented home, up from 32 per cent in 1986.
According to the report, 30 years in the Private Rented Sector, marking the anniversary of when Martin & Co let its first property, growth has been particularly significant in the past 10 years with a staggering two million new households entering the private rented sector across England alone and the number of private rented properties overtaking the social housing sector in 2012.
Over the past two years, net migration has seen 300,000 people entering the UK and the private rented sector is usually their first choice, the research highlighted. The increase in students has also contributed to the growth of the sector. There are now 2.5 million UK students, an increase of 31 per cent since 1995, according to the report.
The introduction of buy-to-let mortgages in the mid-90s is also a significant factor. They now account for 18 per cent of the mortgage market with £338 billion worth of mortgage loans on buy-to-let properties advanced since the late 1990s, according to the research.
Ian Wilson, chief executive, Martin & Co, said: “With property outperforming gold threefold and more than doubling growth seen by shares in the FTSE100 over the past three decades, our forecast is that the private rented sector will continue to grow over the next 30 years and flourish as an asset class. Margaret Thatcher, whose Conservative government introduced the legislative changes that paved the way for the private rented sector to grow, had a vision for the average person to own stocks and shares. In fact, it’s the growth of property assets in the hands of private investors that is the most remarkable change in the landscape.”
The sector has consequently matured as an attractive asset class for investors, outperforming other investments over the past 30 years. Property has grown a staggering 768 per cent in the last three decades, eclipsing assets such as gold more than threefold and more than doubling growth seen by shares in the FTSE 100. In addition to strong capital growth, rental returns also tell a positive story.
In the second half of 2015, the average rent paid by a Martin & Co tenant across the UK was £751 a month, 4.1 per cent higher than the first half of the year. Buy-to-let lending rose by 39 per cent in 2015, the highest since 2007 and the third highest year on record.
The report highlights that the private rented sector could grow by as much as 200,000 homes a year over the next five years as household numbers continue to grow and rising house prices continue to hinder prospective purchasers from getting on the property ladder.
The average first time buyer deposit is now £50,000, compared to just £4,000 in 1986, providing another barrier to home ownership.