While most private renters in the UK aspire to buy property, the reality is that many people simply cannot afford to get a foot on the housing ladder due to high house prices, with many people, particularly millennials, set to rent for the rest of their lives.
With the number of new homes being built across the UK still significantly below the level needed to meet demand from buyers, Britain’s housing shortage has now reached crisis point, with the number of prospective renters also dramatically outweighing the volume of homes on the market.
The latest figures from ARLA Propertymark show that the supply of homes available to rent dropped last month, while demand from renters hit a near 12-month high, and this trend looks set to continue moving forward, as reflected by the slump in the UK homeownership rate, owed largely to fast rising house prices and pitifully meagre wage growth since the financial crisis.
Owner-occupiers in the 35-44 age group, for instance, has fallen from 71.6% to 52.4% over the last 11 years, while private renters have increased from 11.4% to 28.5% over the same period. Social renters in this age group have risen slightly over the same period from 17.0% to 19.1%.
But the housing market is simply not prepared for the growing numbers of life-long renters as the number of new-builds coming onto the market remains significantly below the rate required to meet demand.
If the private rented market shrinks while social housing growth remains relatively flat there is a risk that the much larger number of life-long renters may find their options limited by a lack of housing stock.
With a growing number of life-long renters emerging there is going to be an increasing need for more social housing, more private renting, and more affordable homes across the country.