In this week’s #ExpertView, property expert Kate Faulkner looks in to the reasons for growth in the private rented sector (PRS) and affordability.
The PRS in England and Wales has more than doubled in size since 2002 and in the recent English Housing Survey, it accounted for 20% of households. But has the private rented sector grown because people want to rent or because they cannot afford to buy?
According to property expert, Kate Faulkner, the growth in the PRS is partly due to increased demand, but it’s also fuelled by improvements in the quality of rental stock, encouraging people to choose to rent rather than buy.
Kate, who runs Propertychecklists.co.uk and consultancy, Designs on Property, made the claim in a report commissioned by the TDS Charitable Foundation.
Kate’s report looks in to the reasons driving growth. She said: “To understand how the PRS has grown, we need to be able to see beyond headlines about house prices to know what’s really going on.
“The main contributing factors are – as is commonly understood – a lack of social housing provision, and house price growth outstripping wage increases for many, but that’s not the whole story.
“If we look at a more local level, there are places where affordability has increased but the number of first-time buyers continues to decrease, suggesting house prices and demand aren’t the only forces at play.
“Over the same period that the PRS has gone through dramatic expansion, it’s also improved considerably. Standards of rented properties are now arguably higher than ever before. The increased quality of accommodation has reduced the ‘need’ to buy.
“Good quality rented properties are often much cheaper and more easily accessible than purchasing property, especially in the short to medium term. When high standards of accommodation are available, with the added bonus of flexibility, it can make an enticing proposition.
“There is also caution in some parts of the market, with potential buyers lacking confidence that house values will continue to rise.
“That fear, coupled with tougher restrictions on buy-to-let mortgages putting off landlords from entering or continuing in the market could lead to a situation in the PRS where demand is increasing, and supply is decreasing.
“More research is required into the nuances of the UK’s housing market and stock to understand affordability, renting landscapes and ultimately; to make more effective legislative decisions.”
TDS Charitable Foundation Report:
The TDS Charitable Foundation commissioned Kate Faulkner to produce research reports into the PRS to improve knowledge and educate landlords, agents and tenants, in line with the Foundation’s aims. Her latest report, Has the private rented sector grown because people want to rent or because they cannot afford to buy?, is now available to download as a PDF.
You can read the full report here.
While the TDS Charitable Foundation funds the reports, Kate retains editorial control and the opinions expressed in the report do not necessarily reflect the views of Tenancy Deposit Scheme (TDS) or the TDS Charitable Foundation.
About the author
Kate regularly appears in local and national media, commenting on property matters on TV, radio, print and online titles.
She has now written nine reports into the private rented sector, commissioned by the TDS Charitable Foundation.
About the TDS Charitable Foundation:
The TDS Charitable Foundation is a registered charity with the Charity Commission for England and Wales, and works to achieve its central aim of advancing education about housing rights and obligations, including:
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