The latest English Housing Survey (EHS) – released at the end of January – highlighted the growing importance of the private rented sector (PRS).
The survey, an annual national survey commissioned by the Ministry of Housing, Communities & Local Government, gathers information about the condition and energy efficiency of housing in England and people’s ‘housing circumstances’.
What did it show?
The PRS now accounts for a fifth of all households in England and is now the biggest type of tenure in London.
Looking at 2016-17, the PRS was made up of 4.7 million households, equivalent to 20% of all households. It remains larger than the social rented sector, which accounted for 3.9 million households (or 17% of all households).
Renting privately is now the most prevalent form of tenure in the capital, with 30% of inhabitants renting, followed by 25% who have outright ownership of their home. Outside of London, meanwhile, 19% of people rent privately, once again ahead of the 16% who live in the social rented sector.
Energy efficiency of homes on the up
The energy efficiency of English homes – an increasingly important consideration for landlords and letting agents with the introduction of Minimum Energy Efficiency Standards (MEES) just around the corner and a rising need to appease more environmentally-conscious tenants – has increased dramatically in the last 20 years, although this has slowed down with no improvement between 2015 and 2016.
In 2016, the average SAP rating – which measures a home’s energy performance in terms of energy use, energy efficiency and emissions of CO₂ – reached 62 points, up considerably on the 45 points recorded in 1996. It was a rise that was evident across all tenures.
What’s more, the latest EHS found that the number of homes with smart meters has also increased.
Homes with working smoke and carbon monoxide alarms on the increase
Some 90% of households had at least one working smoke alarm in 2016-17, an increase from 89% in 2015-16 and 84% in 2008-09. The rise between 2008-09 and 2016-17 was seen across all tenures.
Meanwhile, 33% of all dwellings had a carbon monoxide alarm in 2016, a rise of 5% from 2015. Homes with a solid fuel appliance - such as a coal fire or wood burning stove - were more likely to have a carbon monoxide alarm than homes with no solid fuel appliance (37% versus 32%).
How does this affect letting agents?
The continued increase in the number of households renting is a positive trend for the market, creating a wider pool of rental properties to manage and tenants to look after.
Demand is high for rental homes in many areas of the UK, which may encourage further property investment. Promisingly, a recent survey by bridging finance lender MTF found that a third of professional landlords plan to expand their portfolios in 2018 despite the challenges posed by increased buy-to-let regulation and Brexit uncertainty.
What’s more, Knight Frank’s Multihousing Report – released last year – predicts further substantial growth for the PRS in the coming years:
- The number of households living in the PRS is predicted to rise to 24% (5.79 million) by 2021.
- 68% of tenants believe they will still be renting privately in three years’ time.
- Increased demand should lead to higher rents and better yields across the country.
In other words, all the evidence points to letting agents being kept very busy in the next few years, with landlords expanding their portfolios and more tenants than ever looking to rent.
There will be challenges, too – with the introduction of MEES and the General Data Protection Regulation (GDPR) in the next few months, as well as the lettings fees ban at some point in 2019 – but there are plenty of encouraging signs too.