One in five households renting by 2016, say Savills and Rightmove
Thursday 5th April 2012
The number of people renting homes in the private sector has nearly doubled in the last decade, jumping from 2.5 million in 2002 to 4.8 million today.
A new report from estate agency Savills and the property portal Rightmove, ‘Rental Britain’, predicts that one in five households could be in private rental accommodation by 2016.
That would require an additional 1.1 million rental homes.
The report forecasts that a £200bn investment will be needed, but says that only £50bn of this is expected to come from buy-to let-funding.
It says the gap would be filled by institutional investment in new-build rental accommodation, but the report says that this needs to be recognised by the planning system.
The report says that a shortage in supply is making certain areas unaffordable, with rent rises averaging 5.2% across Britain in 2011.
In London, private renting already accounts for 27% of all homes (900,000) having overtaken social renting in 2010, which now accounts for 24% of tenure (783,000 homes).
The report estimates that last year, Britons paid around £48bn in rent to private landlords, and this is expected to rise to £70bn within five years.
Lucian Cook, director of Savills residential research, said: “Meeting the growing demand for private renting and the changing profile of tenant demand are perhaps the greatest challenges facing both the housing industry and policy makers.
“The dynamics of supply and demand make a great case for investment in this sector, and rising rents and lower capital values have begun to attract private investors back into the market. Investment returns relative to other asset classes will dictate the pace of investor entry to this sector.”
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