The demand for rental property in the United Kingdom has reached record levels. A recent government report has shown that since 2001, the number of homes in the private rental sector has increased from 1 million, to 3.2 million.
The private rental sector has become much more appealing recently with tenants being either unable or unwilling to step onto the property ladder, as many people are struggling to afford a mortgage and others prefer the more flexible lifestyle in which renting offers.
According to ARLA’s Operational Manager Ian Potter, the huge increase of demand for rental property means it is very likely there will be a severe shortage of housing available to supply, and this is estimated to only get worse in the next four or five years. ARLA has also reported that 70% of its members have more tenants than properties available to lease, an increase from 59% in the first quarter of 2010. A survey carried out by Countrywide plc has shown that on average there are 5.5 tenants competing for every one property available to rent in the UK.
The property market is expected to continue to struggle, as there are not enough properties being built to keep up with the growing demand. In order to meet the rising demand, the government has stated that 240,000 extra houses a year would have to be built, yet they are only managing to build 180,000 which means the shortage of supply increases by 60,000 every year. There will also be a further strain on the rental market this year with record numbers of university applicants that will arrive in September.
As well as this, there is a further threat to the private rental sector as the rising rate of Capital Gains Tax is expected to discourage potential landlords from investing in the property market.