The latest census figures have shown the extent to which the private rented sector has grown in the last decade. Home ownership was shown to have fallen to just 64% among households across England and Wales, while the number of private tenants rose sharply.
The number of households owned either outright or with a mortgage was found to be slightly under 15m, 4% less than the number recorded in 2001. The private rented sector, by contrast, was seen to have grown by just under an average of 1% each year, with the number of households in the private rented sector increasing from 1,889,000 in 2001 to 3,566,000 in 2011. They now represent 15% of all households.
However, the number of households in England and Wales that are owned outright has increased. 29% of the population owned their property outright in 2001, while 31% owned their property outright in 2011, meaning that the fall in overall home ownership is entirely due to the decline in the number of households buying through a mortgage.
The total population saw a rise of 7%, contributing to the increased demand on the private rented sector.
Ben Thompson, managing director of Legal & General Mortgage Club, said, “Home ownership as a percentage has decreased over the last decade for a variety of reasons.
“Firstly, through the early noughties we saw rising house prices: whilst this was good for many existing home owners, it merely raised the bar too high for some first-time buyers.
“We also saw Stamp Duty levels rise significantly relative to historical levels.
“In 2007 we saw the onset of the credit crunch, and in the years that have followed mortgage availability has fallen, and in particular underwriting criteria have tightened markedly. In short, for many, it is near impossible to secure a mortgage.”
“It is the private rental sector that is absorbing this shift and providing alternative rental options. Private landlords are playing a very important role at the moment and this is likely to last for some time.”
Following the release of the census, ARLA have responded by saying that the surge of tenants in the private rented sector highlights the need for government regulation.
Ian Potter, Managing Director, ARLA said, “The census data confirms what our members have already told us, that would-be home owners are increasingly turning to the private rented sector after being priced out of buying their own property.
“As the PRS continues to expand, it is imperative that the government takes decisive action on regulating letting agents. This will help prevent less scrupulous landlords from taking advantage of the unprecedented level of consumer demand. Renting should be a positive experience for both tenant and landlords, and a professional agent will be able to guide them both through the process.
“In the absence of regulation, we would always advise tenants to rent their properties through an ARLA member agent. All ARLA agents must adhere to a strict code of conduct, as well as offering client money protection and redress schemes, which protect you if things go wrong.”
James Davis, CEO of Upad commented, “The 2011 census figures I feel accurately reflect the changing sentiment within the UK housing market. There has been a distinct change in attitude towards renting with many more young professionals accepting the need to rent for longer and many families now raising their children in rented accommodation. The aspiration to own your own home does of course remain but in the current economic climate, many more have accepted this might not become reality in the same timescales as before.
“Indeed the 6% increase in people renting from a private landlord or letting agency as opposed to from the council has been reflected in our own figures. Now each property our landlords list receive 19 tenant enquiries on average. With the private rented sector now bigger than ever, accounting for 17% of households in the UK, there is ever increasing pressure on the 1.5 million UK landlords to be as professional as possible. Due to their sheer numbers, UK tenants hold more power than ever before and savvy landlords should be aware of this by acting responsibly and fairly at every stage.”
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