No let-up in demand for rented homes
Analysts at estate agent Savills forecast the Private Rented Sector will grow by 1.1 million households by 2021, even if the government target of building 400,000 new affordable homes for sale over this parliament is achieved.
The Savills data suggests the economic recovery and ongoing low interest rate environment have done little to reverse the growing need for rented housing.
Instead, house price inflation higher than wage growth has served to push homeownership further out of reach for many people.
According to the English Housing Survey, private renting grew by a staggering 17,500 households per month on average over the 10 years to 2014.
Government housing policy, including Starter Homes, a greater number of Shared Ownership homes and access to larger equity loans through Help to Buy London, seeks to reverse this trend by helping people access the property ladder.
Susan Emmett, director, Savills residential research, said: “Demand for rented homes could still rise more sharply than we have forecast. We would question whether policies can accelerate housebuilding enough to see the government’s target of 400,000 affordable homes for sale reached in the timescale set.
“And given the overlap between the different schemes, each focused at similar parts of the market, it is possible that one scheme could simply replace the other rather than providing additional homes.
“This analysis demonstrates that we still need to provide a substantial number of homes for rent. Government policy should focus on supporting the development of new homes to rent as well as to buy.”
As the need for rented homes grows, Savills said recent policy announcements are set to constrain the supply of rental homes.
The introduction of a Stamp Duty surcharge of 3% on buy-to-let properties and the restriction on tax relief on mortgage interest payments are likely to limit the ability of private investors to expand their portfolios, the estate agent said.