Industry News
London needs almost 85,000 new private rented homes a year
T
he capital needs almost 85,000 new private rented homes a year to meet its housing needs, a new report has found.
Te report, authored by economics consultancy
Capital Economics and commissioned by the National Residential Landlords Association, reveals the stark shortage in the supply of rented homes across London. Te conclusions are based on the Government’s
long-standing target that 340,000 homes a year must be built across the UK by the middle of this decade to meet future demand. Capital Economics reports that, if owner
occupied and social rented homes in the UK continue at their ten-year average rate of growth, private rented sector supply would have to increase by 227,000 properties per year to meet the government targets. Growth on this level is also needed if supply is
to meet the needs of an anticipated 1.8 million new households over the next ten years. In the case of London, the capital would require approximately 83,000 new rental properties a year over the next decade. Te projections come as official figures show that
the supply of private rented housing in London has fallen by 85,000 over the past five years. Given that renting privately is oſten the first
step young people take when they leave home or university, demand will only increase. Te 15-24 age group in London is forecast to grow by over 120,000 (almost 12 per cent) between now and 2030. Additional survey data by the research
consultancy BVA-BDRC suggests that in Central London, 74 per cent of private landlords saw an increase in the demand for homes to rent in Q4 2021. Tis was up from the 54 per cent figure
In the case of London, the capital would require approximately 83,000 new rental properties a year over the next decade
revealed by BVA/BDRC’s Q3 2021 research. Capital Economics sets out how, in order to
meet targets for housing supply, the Treasury needs to encourage investment in the sector. Greater investment would, it argues, support the provision of new housing in a number of ways. Tis includes, increasing the rate of new builds
and switching commercial property to residential use. Te report also points to the contribution the sector can make in moving stock from short term to long term lets and bringing empty homes back into use.
Ben Beadle, Chief Executive of the National
Residential Landlords Association said: “As the demand for private rental properties picks up following the pandemic, renters across the capital will struggle to find the homes they need and want. For all the efforts to support homeownership, the private rented sector has a vital role to play in housing so many Londoners. “Te analysis demonstrates the folly of the
mayor’s calls for rent controls in the capital, a policy which would serve only to freeze investment in the very homes renters need.”
UK is home to world’s fourth largest private rental market
Research by a specialist property lending company shown has shown the UK ranks fourth in the global rankings of domestic private rental markets, with only the United States, Germany and Japan home to more rental homes. Octane Capital analysed the size of the private
rental market across OECD nations based on the total number of dwellings, the proportion of these attributed to private rentals and what this equates to in terms of the total number of rental homes in each market. Across the UK there are estimated to be over
29.5m homes within the current property market, with approximately 30 per cent of these are thought to be privately rented, meaning the UK’s buy-to-let stock totals over 8.7m homes. Tis places the UK within the top four OECD
nations based on the total number of rental properties within the private rental sector. Top of the table is the United States, where an estimated 34 per cent of the nation’s 139.7m homes are privately rented - a total of 47.7m rental homes. With just shy of 20m privately rented homes,
Germany ranks second but some way behind the United States, with Japan also home to more rental homes than the UK at 8.7m in total. France completes the top five and trails the UK with some 8.3m rental properties within the private rental sector.
CEO of Octane Capital, Jonathan Samuels,
commented: “Te buy-to-let sector is a serious business and privately rented properties not only account for a third of all homes across the nation, but they also provide a home for many,
12 | HMMApril/May 2022 |
www.housingmmonline.co.uk
many more tenants, who have been priced out of homeownership due to high house prices. “Te sheer scale of our private rental market
is clear when viewed in contrast to other nations around the world, with the UK sitting comfortably within the top five. While we will never rival the might of the United States due to the mismatch in geographical size, population and property market size, we could see the UK start to catch the other frontrunners as long term renting becomes more prevalent as a lifestyle choice. “Tis is already a commonplace occurrence in
nations such as Germany where nearly half of all homes are privately rented in order to satisfy this demand. Should we see a similar trend emerge in the UK, there’s no doubt that the buy-to-let sector will continue to swell in size.”
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