Over the last few days we have seen media coverage of a report highlighting the fact that there are more private rental properties than mortgaged properties in London today. This may well surprise many people especially in light of the 1980s which saw a massive increase in UK property ownership. There seem to be a number of reasons why the UK is moving towards the rental market although it is not inevitable that all of the UK will move in this direction.
It goes without saying that the affordability factor is a major influence on a decision whether to buy or rent a property. The situation is even more acute in London where property prices are significantly higher than those in the rest of the UK. As a consequence, it is perhaps no surprise to learn that more and more people are now looking to the London rental market but will this be replicated across the rest of the UK?
One issue which is rarely discussed is the ever changing shape and structure of the UK employment market. Many people are now moving around the UK chasing employment opportunities and therefore acquiring a property may not be top of their list. This has resulted in an increase in the number of people looking to rent properties on a short-term basis while their employment opportunities develop.
Interestingly, as more and more firms look to shift employees around the country for specific tasks we have also seen an increase in demand for serviced apartments. These offer an array of benefits when compared to hotels, the least of which is the price. So, on one hand we have employees looking to leave their options open with regards to property purchasers and we also have employers looking to maximise use of their workforce.
In light of the 2008 economic downturn and the impact this had on the UK property market it was sensible for the UK government and the Bank of England to bring in an array of new mortgage regulations. In effect these were introduced to reduce the number of more speculative mortgage arrangements which many believe helped fuel the UK property downturn as the worldwide economy crashed.
Not only have we seen the introduction of stricter regulations but there is also the requirement for larger deposits. As a consequence, even those looking to acquire property are been forced to save for their deposit over a prolonged period. Whether we see a loosening of the mortgage regulations in years to come remains to be seen but at this moment in time it makes sense to try and avoid the boom and bust of recent years.
The Conservative government introduced the very successful right to buy in the 1980s which led to a massive increase in the number of bought properties in the UK. While the situation seems to be swinging back towards the rental market in London it is debatable as to whether we will see a similar trend across the whole of the UK. It may be that the more expensive areas are out of the reach of first-time buyers and renting may be the only option at this moment. However, the likes of the Midlands and the North of England have not joined in the property boom to the same extent and the affordability factor may be more forgiving for first-time buyers in these areas.