The number of privately rented homes in the UK continued to rise in 2016, the latest research on the subject shows.
Some 4,528,000 properties – 20 per cent of households - are now privately rented across the country, up by 250,000 on the previous year, according to the 2015-16 English Housing Survey.
In stark contrast to the boom in renting, the number of properties owned with a mortgage declined by 252,000 to 6,598,000 - 62.9 per cent of households - further narrowing the gap between the size of the rental and owner markets. The figure compares with a peak in home ownership of 71 per cent in 2003.
Allison Thompson, managing director at property specialist Leaders, says: “These findings show the fundamental importance of the private rented sector in meeting our housing needs. Whilst a proportion of people choose to rent because they prefer the flexibility it offers, many more would prefer to buy their own home but are unable to save the deposit required in order to get their first step on the ladder.
“In the meantime, the government is taking measures to make letting more difficult for private landlords, at a time when it should be supporting them in the vital role they play. With the increased reliance on the private rented sector, the government should be focusing on strengthening and improving the sector by incentivising landlords, rather than penalising them through the tax system.”
The figures show that as the private rented sector has expanded, so has the number of 25-34 year old households privately renting, with an increase of more than 800,000 (or 110 per cent) over the last 10 years, to a total of 1,537,000. In 2005-06, 24 per cent of those aged 25 to 34 were private tenants, whereas by 2015-16 this had increased to 46 per cent.
At the same time, the proportion of families in the private rented sector went up from 30 per cent to 36 per cent and levels of home ownership among the 35-44 age group fell by more than a million in 10 years.
Despite the fall in overall mortgaged home ownership, the research showed an increase in the number of young people on the property ladder. An additional 49,000 people aged between 25 and 34 owned a property in 2016 compared with 2015.
Allison comments: “The positive impact of schemes such as Help to Buy is being felt by young people and this has contributed to a surge in young homeowners. This is encouraging because the key to a successful and prosperous housing market is to make buying a realistic option for those who wish to own their home, while retaining a stable and popular private rental market that is in high demand among those who value the flexibility of renting.
“Despite recent tax changes, investing in the private rented sector remains the preferred option for UK investors, with landlords able to benefit from the exceptionally high demand that has come to define the sector, which ensures properties suffer only minimal void periods and rents remain strong. Tenancies are also longer, with the average time a tenant stays in their rented home currently around four years. All this paints a picture of a stable and growing private rental market.”