It has been announced this week in the news that more than half of the under 40 population will be renting homes from private landlords in the UK in 10 years’ time.
It has also suggested that house prices will rise at an average of 5% a year, pricing the typical family home at £360,000 by 2020, with industry figures showing that as a first time buyer you will need a deposit of 18% to secure a mortgage. Using PwC data, that would equate to a requirement for £64,800 in savings to get on the property ladder in 2020. A big ask for young people in an ever expensing society.
As for Ownership, for young adults, it would become more acute owing to a lack of supply in affordable housing, the PwC report has suggested. The number of homes owned outright would rise from 8.4 million now to 10.6 million by 2025. Overall, it predicted that the proportion of residents who owned the home they lived in would drop from its peak of 70% in the middle of the last decade to about 60% in 2025. This meaning that around 7.2 million households would be private tenants in 10 years’ time, which is good news for landlords.
The recently-published English housing survey found that, in 2013-14, some 48% of households made up of 25 to 34-year-olds rented their home from a private landlord. This had risen from 45% a year earlier, and from 21% in 2003-04. Over the same 10 years, owner occupation in this age group dropped from 59% to 36%. In 2013-14, of the 22.6 million households in England, 7.4 million owned their property outright, and 6.9 million had a mortgage, with the rest in rented houses.
So come on you investors, this is a great time to increase your portfollio. For those thinking of becoming a landlord, be sure to do your due diligence, ask me, ask others, be smart!