Before we begin, just know that it’s not all bad. The Residential Landlords Association (RLA) has found that, in 2019, 84 percent of private tenants are satisfied with their accommodation. On average, they have stayed in their properties for over four years, up from previous counts.
At Residently, it’s our ambition to help drive the industry forwards by redesigning the entire rental experience - leading to happier renters and landlords alike.
So, we’ve gathered the data and found statistics that every UK landlord needs to know. Here they are, together with our advice on how they may impact you.
1. Fewer landlords, same demand
RICs data shows that in the three years from 2017-19, there has been a consistent decline in new landlords, but demand for rental properties has been steady. With one in four landlords looking to sell within the next year (likely due to the increased taxes in the buy-to-let sector), the industry is primed for disruption.
‘Accidental’ landlords have also dropped in numbers for the first time in five years, with a corresponding increase of large-scale and corporate landlords. The positives for renters are a higher standard of property management and the cost benefits that come with economies of scale, but many predict a negative impact too. It’s possible this shift will lead to increased rent prices (up 15 percent by 2023) and a loss of the ‘personal touch’, which could give corporate landlords a bad name amongst renters.
With getting a worthwhile return on investment for individual landlords becoming more difficult, and increasing importance for corporate landlords to provide tenants with a positive experience, you must be wondering, if only there was another way? Well, there is! Discover our unique take on personal property management services, here.
2. Price is a massive factor for renters… except when it isn’t
Rising demand might be good for landlords in the short term, but raising prices isn’t a long-term strategy. Many renters are being priced out of the market. For example, male renters’ salaries are 28 percent higher than female renters’, leaving women with fewer renting options. And in the 2017 financial year, the renting percentage of single parent families increased to 35 percent, compared to 18 percent ten years previously.
The Index of Private Housing Rental Prices shows that from 2011 to 2019 rent prices have risen faster than average weekly earnings. Landlords should be aware of not pricing themselves out of the market, particularly within certain demographics.
On the other hand:
Increasingly over the last seven years, in areas like Kensington and Mayfair, luxury properties to rent are in high demand. This could mean landlords may benefit from consolidating their portfolio into high-end properties at premium prices.
3. Older generations are out-renting young people
What can landlords expect from future renters? In 2019, young professionals (aged 25 to 34) no longer make up the largest group living in the private rented sector, having been overtaken by 35 to 49 year olds. Three times as many people in this group are renting compared to 20 years ago.
This means you can expect longer-term tenants to become more prevalent as this demographic is more likely to have school-age dependants and more developed careers. In the past, these factors would have made getting on the property ladder more appealing for this age group, but with people moving jobs and locations more often, and property not being the obvious investment opportunity it used to be, renting is the new buying.
4. Commuting times matter more than ever
Renters in London are more likely to have a longer commute, with 11 percent saying they lived between an hour and 90 minutes from their place of work, says the ‘Multihousing 2019’ PRS research. Landlords – especially non-London natives or international investors – could take this as a learning that London properties don’t have to be central to be valuable.
On the other hand, UK-wide, renters do enjoy shorter commutes and 76 percent of tenants aren’t considering buying a property if they have to give up their short commute times.
If you’re wondering what buy-to-let opportunity to go for next, consider how the location compares to nearby business districts or cities. If you’re looking in or around London, you can allow longer commutes than you might expect compared to other cities in the UK.
5. The right to rent scheme has created a fearful environment
The right to rent scheme isn’t the problem. Fear is the problem. 44 percent of landlords say they are now less likely to rent to people who don’t have a British passport, which is likely to lock vulnerable individuals without passports (17 percent of the population in England and Wales) out of accessing a rental property. Landlords are also less likely to rent to people with limited time to remain or EU nationals.
However, landlords should be aware of what the right to rent scheme actually means for them, and not miss out on potential tenants due to misinformation. For example, a UK passport is only one of several possible documents a person can provide to prove they have a right to rent in the UK.
6. Apparently, climate change isn’t a big deal
Almost half of UK property investors think climate change risks are ‘irrelevant’ or ‘not important’ according to the RICs global survey of the Commercial and Construction market. But, the 2019 Committee on Climate Change report has found that we cannot meet our national climate objectives without landlords and renters working together to make major changes.
The May 2019 Ipsos MORI Issues Index show that concern about the environment has risen to 20 percent among Britons, the highest in 30 years. Consumers are concerned. Forward-thinking landlords will take steps to provide environmentally-friendly accommodation by doing things like upgrading windows with double or triple glazing, installing smart meters or using renewable energy providers.
Can property rental change for the better?
There’s something broken in the rental market, but it’s worth mending. More and more renters, from millennials to older generations are choosing or would prefer to rent because of the lifestyle it affords. They can often live in better or more central areas or can make more dynamic career choices that mean short stays and quick relocations.
At Residently, we’re rebuilding the rental experience from the group up to make it better for everyone. If you’re interested in improving your rental income and reducing your workload, get in touch for a free valuation.