Renters rise by one million people!

Landlords have the chance to cash in, as the number of people renting rockets.

The private rented sector has long been an important segment of the housing market in this country, but its importance is on the rise. According to new figures from the Communities and Local Government’s English Housing Report, the number of households renting has risen by one million over the past few years.

The study confirmed that while there were 2.4 million renting households in 2005/6, this had grown to 3.4 million by 2009/10.

Indeed, private rented properties now make up 15.65 of all households in England, up from 11.7% in 2005/6, the equivalent of almost one in six homes.

Young and renting

Perhaps unsurprisingly, it’s young people who make up a significant proportion of the renting populace. The Housing Survey found that half of all renters are under the age of 35.

There’s a very simple reason for that – it’s simply too expensive for most young people to buy property. The average deposit required for a first-time buyer is now £31,700, the equivalent of more than a year’s salary for many people.

Indeed, according to Government estimates, the average age of a first-time buyer has been pushed up to around 37 years of age now. Given that by the time you reach 25, let alone 35, you probably can’t cope with living at home with your parents any more, that’s a rich source of potential tenants for landlords to take advantage of.

And they are.

Boosting portfolios

New figures from Connells Survey and Valuation have shown that valuations for prospective buy-to-let landlords have risen for the third straight month. Indeed, the number of valuations conducted in February was a whopping 12% higher than a year ago.

This is a pretty strong sign that landlords smell an opportunity to make a few quid. And it’s not just the record levels of demand that are enticing them into expanding their portfolios, but the rents they can charge.

According to the Royal Institution of Chartered Surveyors’ most recent housing market survey, rents have risen at a rapid pace in the three months to the end of January. 40% more surveyors reported a rise in rents than a fall, the highest positive in the survey’s history. Indeed, rental yields have also risen in the past four consecutive surveys.

With demand only likely to increase – gloomy economist Capital Economics reckons that rental properties may account for as many as one in five households by 2015 – it’s easy to see why landlords are so keen to buy.