Boost for rental homes as higher house prices and tighter mortgage lending criteria prevents people from buying
Landlords have collectively made a £177bn profit during the past five years as a result of soaring house prices, research showed today.
Estate agents Savills said private sector landlords have been one of the biggest beneficiaries of the recent property market boom, according to a report in the Financial Times.
The group pointed out that a combination of higher house prices and tighter mortgage lending criteria had prevented many people from getting on to the housing ladder, boosting demand for rented homes.
It said total value of privately rented property in Britain had soared by 57 per cent since 2009, to top £1tn this year, due to a combination of rising house prices and increased investment in the sector.
It estimates that landlords have collectively made a £177bn profit on their rental portfolios since 2009 through house price growth, but before income from rent is factored in.
Lucian Cook, director of residential research at Savills, told the newspaper: “The benefit of recent house price growth has become increasingly concentrated in the hands of private investors.
“In a housing market that is expensive, relative to people’s income, it is difficult to see how this will change, particularly given increased mortgage regulation.”
Savills expects strong demand for rental homes to continue going forward.
It is forecasting that the number of homes renting through the private sector will increase by 1.2 million during the coming five years, with households aged over 35 accounting for more than half of this growth.
As a result of the increasing age of tenants, it thinks demand for rented family homes will grow at a faster pace than demand for smaller properties.
The group forecasts rents in the mainstream market to grow “a little ahead of expected wage growth”, rising by 20.5 per cent across Britain in the coming five years.
In terms of other trends, it anticipates that tenants will either pay more of their income to secure properties in locations good amenities and transport links, or live in shared properties in order to maximise what they can get for their budget.
Strong house price growth has left the average UK property costing £267,650, according to Zoopla.
But there are growing signs that the market has slowed down, with house price growth of just 3 per cent to 5 per cent forecast for 2015, while some commentators are even predicting slight dips in the average cost of a home.
Article taken from www.zoopla