By 2025, Londoners will be mainly renters
London will be a city of renters, not homeowners, in the years ahead, according to recent research from PwC.
The PwC, a consultancy firm, has forecast that only 40% of Londoners will own their own home by 2025. This compares with the year 2000, when 60% of Londoners were homeowners.
The number of people renting is predicted to rise in all regions of the UK, not just in London. This puts a dampener on the government’s attempts to curb buy-to-let activity and support first-time buyers onto the property ladder.
Britain has long been a nation obsessed with home ownership. The UK’s residential market is a relatively stable one, so it’s easy to see why. Many regard ownership of a property as a mark of success, and as an indicator of wealth. It’s ingrained into our attitudes. Interestingly enough, the opposite is true in other European countries, such as The Netherlands and Germany. Here, attitudes are very different towards renting late into adulthood. Less emphasis is placed on the value of home ownership, while flexible solutions are in place for those who want to rent long-term.
Property values in London have increased by an incredible amount in the last 20 years. As demand for affordable homes continues to outrun supply, many would-be first-time buyers are renting for longer. With mortgages harder to come by, and deposits harder to save for (mainly due to the high cost of living and renting in London), renting, for some, is the only option.
However, there are many renters who appreciate the freedom and flexibility that comes with renting. For one, you’re not burdened by mortgage repayments. It’s also a reality that people move jobs more frequently than they used to, meaning they may need to move house to accommodate a different commute. Renting makes it easier for people to move from place to place.
Given the rise in property prices, especially in London, many face a future of renting. The buy-to-let sector has soared in recent years, giving more accommodation options to tenants, but a series of stamp duty rises and tax changes have slowed the buy-to-let market in recent months. There are now murmurs that rents could increase in London.
With more tenants renting in the long-term, this brings us to the reemerging ‘build to rent’ sector. It remains to be seen whether build to rent will continue to grow. According to the British Property Federation, there is approximately £50 billion of capital standing by for build to rent.
With the right amount of government support, it’s predicted the supply of build to rent homes could reach 10,000 per year by 2020. With demand strong demand for rental housing, particularly in London, build to rent is now very much on the government’s housing agenda.
London could well be a city of renters in 10 years’ time, but this may not matter. All that’s really needed is a change in attitudes towards home ownership – and renting.