A new analysis of the private rental sector suggests that between 800,000 and one million more homes are required to meet growing demand by 2031.
Savills - an estate agency which is a long-time stalwart of Build To Rent - has looked at the private rental sector overall, and not just BTR. It has calculated the propensity of different age groups to rent and applied this to government household projections.
Savills says “these projections point to an additional 800,000 to 1,000,000 Private Rented Sector households by 2031, under three scenarios. Our base case scenario identified that between 2021 and 2031, the greatest growth in the number of PRS households will be in the 25–34 year old age group, with an additional 370,000 during this period. There will [also] be an additional 229,000 35–44-year-olds.
Other scenarios involved a ‘Help to Buy 2’ stimulus or an ‘Affordable Home Building Programme’. Our projections indicate that a stimulus package similar in scale and impact to Help to Buy would soften future PRS demand by 20 per cent (c.200,000 households) and an affordable homebuilding programme would soften demand by 11 per cent (c.110,000 households). While a Help to Buy 2 would deliver more houses, it would come at the cost of fuelling further house price inflation, which has the dual effect of (i) pushing home ownership further out of reach for middle-income earners, whilst (ii) simultaneously putting increased pressure on PRS rents.”
The analysis appears in a Savills report backing the development of much more BTR housing in the UK.
The agency says some £250 billion of investment is needed to meet the growing rental demand by 2031, while they suggest that demand will be greater for so-called ‘single-family homes’ rather than blocks of rental flats.
“We need to adopt a positive response to the housing crisis, across all tenures. Build To Rent can help to deliver many more homes, more quickly, and secure investment that improves the energy efficiency of the private rented sector, while meeting the needs of young, middle-income households," says Jacqui Daly, director of residential research at Savills.
Savills calculates that £3.5 billion has so far been spent building over 10,000 purpose-built BTR homes; to build another one million would cost £250 billion.
Millions 'putting their lives on hold' as UK sees record rent rises
Millions of people across the UK are said to be delaying major life decisions because of uncertainty in the property market, a poll has found. Around 14 million people admitted that insecure housing has led them to 'put their lives on hold' and sacrifice things such as starting a family or buying a house.
The poll, carried out on behalf of housing association Hyde Group, comes as figures from the ONS published on Wednesday (January 17) showed private rents in England rose by 6.1% in 2023, making last year the steepest on record for rent rises. Wales saw the biggest annual increase in rents, with prices rising 7.1% over the year to December, down only slightly from the 7.3% rise in rents in the year to November. In Scotland, rents rose by 6.2% across 2023.
Andy Hulme, chief executive of the Hyde Group, said “when more than four in 10 adults aged under 35 are telling us they are putting off starting a family because they aren’t sure where they can live, the main political parties have to start listening. Millions of people across the nation are putting their lives on hold because they are trapped by our national housing crisis which we’ve failed to tackle for decades. Not only is setting out a clear plan to build more and invest in affordable and social housing the right thing to do, but this polling shows it’s a vote winner too.”
The poll found 53% of voters said they were more likely to back a party that promised to invest more money in affordable and social housing, with the figure rising to 61% of adults under 35.
Wednesday’s ONS figures showed rents rising in the UK as a whole by 6.2%, also the highest rise for a calendar year on record, and at a time when house prices are falling slightly. The crisis is particularly acute in the capital, where rents rose 6.8% last year and 41% of people told the Hyde survey that they had delayed major life decisions because of housing uncertainty.
Sam Richards, a former Downing Street adviser and founder of pro-growth think tank Britain Remade, said “the amount that people are having to pay for rent, especially in London, is simply out of control. It is astonishing that the rent paid for a one-bedroom flat in the capital will get you a three-bedroom home in the rest of England. The only way we can fix this is by reforming our outdated planning system so we can get spades in the ground and build more homes. Not only will this allow young people to once again fulfil their dreams of owning their own homes, but it is also critical to boosting productivity and job creation in and around our major cities. Until we build the homes Britain needs, millions of people up and down the country will be denied the dream of home ownership, while renters will be condemned to paying ever increasing eye-watering rents.”
The Hyde Group poll, carried out by Savanta, surveyed 2,226 people between September 6 and October 16.
Breakthrough allows rent payments to be reported to credit agencies
The long-running aspiration of many to allow rental payments to be counted towards credit ratings appears to have taken a step forward.
CreditLadder, which says it’s the UK’s largest rent reporting platform, is working with digital service Digital ID Connect to allow app users to report their rental payments into the four main credit reference agencies.
CreditLadder has now reported over £1 billion in rent payments - this means these payments now appear on credit files therefore allowing lenders to see that on-time rent payments have been made. These on-time payments can also help improve a tenant’s credit score, much like a homeowner can benefit from on-time mortgage payments.
Renters can sign up to CreditLadder using any one of the Digital ID apps within the Digital ID Connect network to securely provide personal details, prove age and identity. Users then provide details of their bank account, rent amount and tenancy information, enabling CreditLadder to capture and track rental payments automatically, via Open Banking.
John Abbott, chief commercial officer at Yoti, says: “The vision for Digital ID Connect is to provide faster and more secure ways for people to share their information with valued services that need identity or age verification. I am delighted to be working with CreditLadder so that the tens of thousands of people installing our app each month have extended partnerships available at their fingertips”.
And Sheraz Dar, CreditLadder chief executive, adds: “By enabling Digital ID Connect users to report their rent payments we move another step closer to helping every single tenant improve their access to credit and accomplish their financial goals. With lenders in the UK factoring in rent payments when making credit decisions, including beginning to consider on time rent payments when looking to assess mortgage applications, it's yet another reason why reporting rental payments is so important”.