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The long-term future’s bright for landlords, as half of those under 40 set to rent privately by 2025
July 29, 2015Article by Ray Withers
The UK housing market has for some time now been engaged in a slow but definite shape change. It’s been clear that the old model of get married, get a mortgage, get a first house together is definitely no longer the norm for many families, but now a new report from PwC has outlined just how permanent the market’s metamorphosis is likely to be.
Renting into your 40s
Perhaps the most headline-grabbing figure for me was the fact that PwC’s latest UK Economic Outlook report has predicted that half of under 40s will be living in private rented accommodation by 2025. Know as Generation Rent, these families have found that spiralling house prices in many areas and tougher mortgage criteria have combined to mean that a house purchase simply isn’t an option.
At the same time, a shift in attitudes (quite possible as a result of this inability to own a home of their own) has led Generation Renters to become more demanding in their standards, as they seek to rent homes that are bigger and better than they could afford to purchase. The attitude seems to be one of, “Well, if I can’t buy, I’m going to rent an awesome home instead.”
PwC’s figures project that 7.2 million households will be renting by 2025, with 1.8 million additional privately rented households joining those already renting over the next decade.
Of course, where there are 1.8 million additional privately rented households, there is also a need for 1.8 million private landlords, which is precisely where Property Frontiers’ clients come in! We’ve experienced high demand for our UK buy-to-let investment properties from investors around the world and this latest PwC report is no doubt set to drive up demand from investors even more.
In our experience, investors are looking for buy-to-let properties that have good locations and interesting features that will ensure their long-term appeal, such as Custom Quay. Located in the thriving Salford Quays area of Manchester, which is packed with young professional renters, the development enjoys not just a stunning waterfront location, but also an extensive communal roof terrace with views over the water and the city.
Double joy with treble increases
With buy-to-let investments, looking at price gains is also important. As well as hugely increased demand, investors in UK property can now be doubly happy, as the Centre for Economics and Business Research (CBRE) has just trebled its UK house price growth forecast for 2015. Four months ago the CBRE anticipated price growth of 1.5% during 2015, but now it has increased the figure to 4.7%, citing supply shortages as the driver of the amended figure.
The news means that investors in UK buy-to-let properties can look forward to happy outcomes in the short-term as well as the long-term. Savills’ latest data on long-term price increases spells out even more positive news – property prices are set to rise between 17.5% in Scotland and 25.7% in the prime London suburbs over the next five years.
I feel both humbled and proud to reflect that I’ve been at the helm of Property Frontiers for over a decade. It’s exciting to think that in another 10 years’ time, many of our investors will still be enjoying income from the same buy-to-let properties that they are purchasing this year, using their property portfolio as a pension and as a profitable inheritance for their children.