In the face of ever inflating house prices, renting has become the only option for many would-be buyers. With reports indicating a quarter of UK households will rent privately by 2021, this new market dynamic presents a serious set of challenges and opportunities for stakeholders at every level from developers and planners through to tenants themselves
Adapting to this changing landscape is essential if businesses in this sector are able to survive – and in today’s article, we hope to offer some insights. Along with the home experts at OWO Living, we’re providing a look at what the future holds when it comes to rentals.
So, what does the current landscape look like?
The growth of the UK’s rental market has been fueled by a melting pot of factors – from largely stagnant public and private sector wages and a general lack of new affordable homes, to an aging population with many living alone in multi-bedroom accommodation. For developers, this means the pressure will continue to mount, as both the government and general public cry out for affordable accommodation. With the stakes becoming higher by the month, how is the rental market going to change in the months and years to come?
For developers, construction companies and planners
sponse to rising demand for affordable homes for rent, the housing market has experienced a boom in Build to Rent schemes, with the total capital invested surpassing £2 billion, for the first time, in 2017. While some have said this isn’t a long-term solution to the UK’s housing crisis, for developers, this means overseas investors are aplenty, with Build to Rent construction opportunities cropping up across the UK.
Aside from the growing presence of the now-established buy to let market, the crisis has meant many businesses in the construction industry are seeking new ways to innovate. Combining quicker build times with consistent quality could provide a welcome antidote to the country’s housing ailment – and it’s clear that many companies have taken this approach head on. Whether it’s the incorporation of modular construction techniques, panelised systems or even 3D printing, new avenues are being explored more and more in the face of the crisis – and that can only be a good thing for the industry as a whole as it heads into the future.
For the government
Though the housing shortage is a UK-wide problem, that’s not to say different UK governments and councils face a different set of challenges. But despite this, there is hope on the horizon. In 2017, the government smashed its target of constructing 200,000 new homes in England, something that hadn’t happened since 2007. What’s more, Scotland is looking set to meet its own affordable housing target – to deliver 50,000 homes over the current Parliament.
While this abundance of new properties is only a small win when looking at the bigger picture, it’s certainly a step in the right direction. If the UK government continues to hit new build construction targets, which was recently increased by an extra 100,000 in England, this should drive average property prices down – which means that would-be renters will be far more likely to step onto the property ladder in the first place. Of course, this isn’t guaranteed – as the issue is much more complicated and there are vast differences between regions – however, it provides a promising foundation for the housing market of the future.
Tenants
As private renting becomes more widespread, the circumstances for those living in privately rented homes are also changing. New legislation, such as the private tenancy rules passed by Scotland last year, will make renting an entirely more secure prospect for tenants. With longer notice periods and an end to fixed-term rentals, there are a number of measures being brought forward that will make life as a private renter more comfortable – and this may mean those already renting will be less inclined to leave the market.
On the other hand, rents are currently increasing, which presents a massive problem for those in difficult circumstances. Downsizing is quickly becoming the only viable option for many first-time buyers, hence why ‘micro homes’ have seen a sharp rise in popularity, especially in areas like London where space is at a greater premium.
The future of rental
The housing crisis wasn’t caused overnight, and the growing market of private rentals that came alongside it won’t go away quickly, either. With the government’s united push on delivering affordable new homes for the younger generations, alongside planners and developers continuing to innovate, it seems that buying a property may become achievable for the general population again – at least in the medium to long term. In the short term though, it’s up to the government to provide the legal protection renters need and up to the construction industry to build good-quality homes that don’t cost the Earth.
Shuayb Patel
Director
OWO Living
