Rental unaffordability is at its highest level for over a decade and now equates to 35 per cent of the average income of a single earner, according to recent research by Zoopla.
The problem has hit London especially hard, where rents are up 17% on 2021. London has seen the highest rent rises in the country, after Manchester (15.6%), Birmingham (12.3%), Bristol (12.9%) and Sheffield (12.4%).
Andy Jones is Group Director Corporate & Build to Rent at property services company Leaders Romans Group (LRG). He explains, ‘Supply and demand is at the root of the problem: the stock of homes for rent is down 38 per cent in comparison to the five-year average, mostly due to many landlords withdrawing from the market. As mortgage rates increase and a potential recession looms, many would-be first time buyers are delaying purchasing a home, which is exacerbating the problem.
‘The solution to meeting demand is increased investment in quality rental stock. Fortunately the signs are positive. Research among global institutional investors has found that 70% anticipate being active in the suburban Build to Rent (BTR) market within the next five years: a substantial increase from the 42% currently active. Furthermore, recent analysis by the British Property Federation states that the sector is set to be worth £170bn by 2032 due to BTR units in the UK rising from 76,800 to over 380,000.
‘The problem will also be helped by more rental properties being provide outside cities such as London, Manchester and Birmingham. Our recent white paper BTR suburban communities: the next stage in the evolution of Build to Rent found that suburban BTR is key to meeting growing demand. In contrast to traditional BTR, this new iteration focuses on the areas of rapidly growing demand: family homes in suburban locations. BTR suburban communities also offer levels of service and flexibility above that available through home ownership and frequently property maintenance, wide ranging amenities and the flexibility for a tenant to move with ease from one unit to another as their requirements change.
‘So solutions to the crisis exist in the form of new opportunities and investor interest. What is lacking is Government support. The Government, in its white paper A Fairer Rented Private Sector, committed to raising standards in the private rented sector. And so it is disappointing that the long-promised Renters Reform Bill is delayed; also that new planning guidance published for consultation in December, failed to make any mention of BTR.
‘Government support is the missing piece of the jigsaw and once in place, could ease the growing difficulties.’