Buy to let hits highest level for 25 years

buy to letPrivate renting is at the highest level since the early 1990s as home ownership ebbs back to lowest numbers for a quarter of a century.

Most homes are still in private hands. However, the share of all homes is 65.3% – the lowest recorded since the 1980s, when council tenants were encouraged to buy their properties.

The peak of home ownership was 70.9% in 2003, but rapid rises in property prices coupled with a lack of credit means the figure has fallen recently.

The figures from the Department for Communities and Local Government (DCLG), in the English Housing Survey 2011 to 2012, reveal the private rented sector has seen several years of growth and now equals the social rented sector at 3.8 million households each.

Shift from owning a home to renting

The average weekly rent in the private rented sector remains above that in the social sector at £164 per week compared to £83.

Around 2.7 million private renters have an assured shorthold tenancy agreement. Around 144,000 do not pay rent, as their home is owned by family or friends or comes with their job.

The energy efficiency of rented housing stock has also improved by 12 SAP points since 1996 to 57. However, the social sector has the largest proportion of dwellings with the highest energy efficiency rating of A to C.

The Royal Institution of Chartered Surveyors (RICS) chief economist Simon Rubinsohn said the report shows there is a shift away from owner-occupation towards the rental sector.

Shelter survey undermined

“RICS believes these broad trends are set to persist,” he said. “Although the Funding for Lending Scheme has raised the availability of finance for first-time buyers, required deposits are still historically high, limiting accessibility for many.”
The report also shows that 60% of private renters expect to buy a property at some time, but 45% expect this to be five or more years away.

Housing and homelessness charity Shelter has recently produced research showing that families are stuck in a “rent trap”, claiming they are unable to save for a mortgage deposit because rent rises leave them with little spare cash.

The DCLG report undermines this by confirming mean rents have risen for private renters, amounts showed no significant change from 2010 to 2011.

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