Where is the rental market heading

Over 50 per cent of the UK's households will be rented by 2032 if current trends persist.

This is according to new research from the Intermediary Mortgage Lenders Association (IMLA), which revealed the private rented sector (PRS) has grown from 14 per cent of the country's housing in 2007 to 18 per cent in 2013.

Owner occupation has fallen from 68 per cent to 64 per cent in the same period and social housing's share of the market has also dropped.

The IMLA said there are a number of factors that are behind the growth of the PRS. These include the increasing difficulty associated with becoming a homeowner, changes in employment, high levels of immigration, an increase in the number of students, later marriages and growing separation rates.

Meanwhile, the population is expected to continue to expand, reaching 67.8 million by 2020 and 75.3 million by 2035.

The IMLA said that unless there is a major shift in the economy or government policy these factors will see the rental sector continue to increase dramatically and overtake home ownership as the country's staple form of housing. 

Peter Williams, executive director at the organisation, stated: "This report is a fresh look at how and why the private rental sector has grown. It asks important questions about our current direction of travel and the failure to build enough homes to support the rising population."

"Growth of the private rented sector has been from a historically low base and has been fuelled by strong underlying demand," he added.

The changes forecast by the IMLA can already be seen among young people, with homeownership rates having fallen significantly in recent years.

From 1991 to 2013, the number of 16 to 24-year-olds who own a property has dropped from 36 per cent to 11 per cent, while among 25 to 34-year-olds it has fallen from 67 per cent to 40 per cent.

by Gary Whittaker

 16-May-14