Almost 5.8 million households – or 24% – will be renting privately in the UK by 2021, up from around 5 million households today.
An annual report into the Private Rented Sector commissioned by Knight Frank forecasts that in five years’ time there will be 14.3 million owner-occupiers, 5.8 million people renting privately and 4.3 million as tenants in social housing.
Researchers from YouGov surveyed more than 10,000 tenants nationwide, as well as 26 major investors in the housing sector to gain an understanding of how private renting will develop over the next few years, with institutional investors considering longer-term developments such as Build to Rent.
With average net monthly incomes at between £1,000 and £2,000, 40% of tenants said they were forking out more than half their salaries on rent each month.
Researchers found that the key concern for tenants is affordability, with renting within their budget the main priority for 63% of those polled. Location was the second biggest factor, cited by 24% of tenants, while the size of the property was only a key concern for 8% of tenants.
More than two thirds of tenants saving for a deposit
The survey also found that more than two thirds (68%) of tenants in the UK expect to be living in the rented sector in three years’ time, with 30% explaining that they were saving up for a deposit and 21% renting in a neighbourhood that was out of their price range.
Knight Frank’s research suggests that, except for tenants aged 50 to 64, the main reason why tenants rent is to save up for a deposit. This includes those under 25, dubbed ‘iGens’, millennials and 40-somethings, as well as young families.
In the older ‘active living’ age group of 50- to 64-year-olds, the primary reason for renting was that it was more affordable than being a homeowner, with 78% expecting to still be renting in three years’ time.
Tim Hyatt, head of residential lettings at Knight Frank, suggests that more people are renting out of choice rather than because they can’t afford to buy, saying: “The flexibility that renting offers has reinforced its popularity as both a sensible and accepted solution for young couples without children and those living on their own, but also highlights an expected rise in older households over the next five years.