As we come to the end of another successful year in the private rented sector (PRS), it’s time to look forward to 2015 and what the future holds for tenants and landlords.
We have mentioned a few times in our blogs over the year that renting is increasingly becoming a lifestyle choice for the UK population, something we have seen in Europe for many years now. One report, commissioned by the Intermediary Mortgage Lenders Association (IMLA), said that by 2032 over half of homes in the UK will be rented.
Now 2032 may be some way off but the report goes a long way to highlight the generational shift towards renting. Since 2007, the PRS has grown from 14% to 18% of all households while owner occupation has dipped to 64% from 68%.
The report concluded by saying that homeownership in the British Isles is increasingly becoming the preserve of the older generations and that the past is becoming the future as we move towards a 1970s-style population of long-term tenants.
Back to the present, as previously mentioned, this year has been a strong one in the property market as a whole. And while the rental market may not have experienced the stratospheric yo-yo growth witnessed in the sales market, activity has been strong and consistent, particularly in Scotland.
So far this year we have seen positive figures from a variety of different sources and reports. We have been told by one Buy-to-Let Index that the average rent in Scotland is now 2.2% (£12) higher than last year, compared to growth of just 1.5% in England and Wales. What’s more, this figure specifically in the Lothians – the location of Letting Solutions – has grown by an impressive 5.7%.
Another set of stats that caught our eye this year were courtesy of Lettingweb. The report compiled data from over 350 Scottish letting agents – so is very representative – and found that in West Lothian annual rents have increased by 3.1% and average gross initial yields in the area are now 7.8%, very pleasing reading indeed for landlords and agents alike.
The latest data, this time from Homelet (the largest monthly data set on the UK’s PRS), shows more positive movement in Scotland with a monthly rental price increase of 8.7% in November, and annual growth now standing at over 11%.
It’s very clear from the figures above, which is not an exhaustive selection, that our sector is strong and growing. Moreover, there is now such strong demand from tenants that some industry thought-leaders have started to talk about a shortage of rental property in Scotland. Yes, that’s right there is a gap in the market for new landlords, with high numbers of tenants chasing every property.
Now looking forward to next year and reports have already started to emerge highlighting the UK’s landlords’ bullishness when it comes to expanding their property portfolios over the next twelve months.
One study, carried out by an online letting agent, found that over half of landlords are looking to buy more property in 2015 and are feeling very optimistic about the New Year, due to the aforementioned growth in tenant demand, falling rent arrears and rising rent prices.
Furthermore, another study, released by a tenant website, says that 40% of UK landlords will be raising rents next year, with 27% planning to raise by more than 3%.
Hopefully this blog will provide some food for thought over Christmas and New Year and sets out why if ever there was a time to become a landlord or expand your portfolio, the early months of 2015 could just be it.
To find out how much your property could fetch in monthly rents in today’s local market, use our online free property valuation tool for an instant rental valuation. And for any additional advice on property to let, you can contact us on: 01506 496006.