Private rental properties have been a source of controversy for many, both socially and politically. In an effort to assist first-time buyers in entering the market, the government has implemented measures to slow the growth of the sector.
A new recent report presents evidence about how tenants truly feel about renting. So who are ‘Generation Rent’ and are they content with their current living arrangements or do they desire property ownership? And what implications might further reforms have on both landlords and tenants.
GOVERNMENT TO IMPLEMENT LAWS
The private rental sector has seen immense growth in recent decades in the UK; between 2000 and 2017 it doubled in size, rising from 10% to 20% of the housing market. This has prompted the government to implement laws aimed at limiting this expansion, such as scrapping Section 21 while giving tenants more power over rent increases, which is set to take effect from May 2023.
Despite these reforms, the report suggests that the crucial role private renting plays in people’s lives is being overlooked. Is there really a problem with Generation Rent or does their situation involve both pros and cons? As a result of governmental policies, what effects will be felt by landlords and tenants alike? These remain key questions the report identifies if we are really to understand the true report impact that private rentals have on society today.
POSITIVE VIEW OF THE PRIVATE RENTAL SECTOR
Many tenants have a positive view of the private rental sector and appreciate the benefits it provides, with only 18% saying they would prefer to own a house instead of renting.
The number of tenants aged between 45 to 64 has increased by a staggering 56% since 2013.
This suggests that private rentals are not holding people back from buying homes. The report also highlights several advantages that tenants enjoy in private rentals. For instance, over half (52%) appreciate not having to worry about property maintenance or repairs. Additionally, 37% value the flexibility that renting offers in terms of being able to move without being tied down to one location.
VITAL ROLE IN MEETING HOUSING NEEDS
Almost one-third (31%) stated that renting allows them to live in an area they couldn’t afford to buy in, while 45% lived within five kilometres of their workplace. Overall, this suggests that private rentals can offer an attractive lifestyle for many people and play a vital role in meeting housing needs.
Contrary to popular belief, private renting is no longer just for young people, with the average age of a tenant increasing. While tenants aged between 16 to 34 still make up a significant portion 43% of the private rental sector, those aged 65 and over represent only 9%. This means that the majority of tenants fall in the age range of 35-64.
MOST SIGNIFICANT GROWTH IN THE LAST DECADE
Interestingly, renters between the ages of 35 and 64 have experienced the most significant growth in the last decade. Specifically, the number of tenants aged between 45 to 64 has increased by a staggering 56% since 2013.
By contrast, there has been little change in the number of tenants aged 16 to 34 during this period. This suggests that much of the the growth in private rentals can be attributed to older tenants who may have owned homes in the past but are now choosing to rent instead.
CATERING TO A BROADER DEMOGRAPHIC THAN EVER BEFORE
This highlights how private rentals are catering to a broader demographic than ever before and providing a viable alternative to home ownership for many people.
While private rentals offer various benefits, there are also some challenges that tenants face. The report sheds light on the top three things that tenants dislike about renting. Firstly, 48% of tenants surveyed found renting expensive. This highlights the affordability issue faced by many renters, particularly in high-cost areas.
INSECURITY OF TENURE ASSOCIATED WITH RENTING
Secondly, 37% of respondents didn’t like the insecurity of tenure associated with renting. This suggests that many renters would prefer more stability and security in their housing situation. Lastly, 25% of tenants reported not enjoying dealing with their landlords. This could be due to issues such as poor communication or maintenance problems.
The report also sheds light on the reasons why many tenants find it challenging to transition from renting to homeownership. Unsurprisingly, 63% of respondents agreed that saving for a deposit is the most significant obstacle for tenants looking to buy. This highlights the financial barrier faced by many renters who wish to become homeowners.
INCOME INEQUALITY CAN BE A MAJOR OBSTACLE
Additionally, 57% of tenants felt that property prices were too high, making it difficult for them to afford a home. This suggests that affordability is a significant concern for those looking to purchase property. And, 41% of respondents didn’t think their income could support a mortgage. This highlights how income inequality can be a major obstacle in achieving homeownership.
The government’s goal to increase homeownership to 70% has prompted discussions on whether reducing the size of the private rental sector is the solution. But reducing the size of the private rental sector without increasing social housing availability will impact lower-income tenants more.
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Source: National Residential Landlords Association (NRLA) – The Data Observatory – 03/03/23.