The private rental sector could expand to cover 40 per cent of households and the UK population is likely to split into those who rent and those who own multiple properties, according to the head of one of Britain’s largest lettings organisations.
In a presentation to journalists, Ian Wilson - chief executive of Martin & Co.,which has a network of 192 offices across the country - has unveiled research looking at how the private rental sector has changed in the 30 years since his company began letting homes.
The number of private rented sector homes has increased by 135 per cent since 1985 but with much more dramatic changes to the demographics of letting - for example there has been a 346 per cent increase in the number of households aged between 35 and 44 in this sector over the past three decades. Now no less than 71 per cent of households aged between 16 and 24 live in a privately rented home, up from 32 per cent in 1986.
According to the report - 30 Years In The Private Rented Sector - growth has been strongest in the past 10 years with no fewer than two million new households entering the private rented sector across England alone and the number of private rented properties overtaking the social housing sector in 2012.
Over the past two years, net migration has seen 300,000 people entering the UK and the private rented sector is usually their first choice. In addition, there are now 2.5 million UK students, an increase of 31 per cent since 1995 according to the report.
The sector has outperformed rival investments over the past 30 years, too. Residential property has grown 768 per cent in the last three decades, three times that of gold and twice that of shares in FTSE 100 companies.
Rental income has changed beyond recognition too. In the second half of 2015, the average rent paid by a Martin & Co tenant across the UK was £751 a month, 4.1 per cent higher than the first half of the year. Buy-to-let lending rose by 39 per cent in 2015, the highest since 2007 and the third highest year on record.
The report also highlights that the private rental sector could grow by 200,000 homes a year over the next five years as household numbers continue to increase and rising house prices hinder prospective purchasers.
(Additional reporting by Conor Shilling of Angels Media).