Are ‘would be’ Nottingham homeowners warming to the idea of renting?

When reading a report produced by Halifax regarding the UK property market and why more and more of the younger generation seem to be renting rather than buying. I find it fascinating that over the last ten years, the British obsession of buying a house almost as soon as you have left school, has turned on its head to the point where the hopes and dreams of owning a nice home have been replaced by the ambition to simply living in one.

In the not so distant past the 'done thing' was to leave school, get a job, buy a small affordable house allowing one to slowly move up the property ladder until retirement. However the property market has changed and there is no longer a stigma associated with renting in the UK -indeed people are beginning to accept a lifetime of renting. This is a very important consideration for both Nottingham homeowners and landlords as it will transform the way the Nottingham property ladder looks in the future and whether or not it will exist at all for some people. The make up of households is an important factor, especially in the Nottingham property market. The normal stereotypical married couple, two children and dog of the 1970s and 1980s has changed. More and more we have the need for larger houses where two families come together as a result of an increase in the number of divorces as well as an increase in the number of one person households.

Looking at the data for Nottingham, of the 7,795 private rental properties in the Nottingham City Council area, 29.16% of those rented properties are one person households. However when we compare the number of one person Nottingham households who have bought their own property with a mortgage, of the 56,867 owner occupied households in the area, only 7,266 of those properties are a one person household (i.e. 12.7%).  This recent explosion in demand for decent high quality rental properties for one person households has not been met with an increase in supply of such properties.  More and more I believe Nottingham landlords need to consider this change in the makeup of Nottingham households, as I believe this could be an opportunity.  Another interesting statistic that raised an eyebrow is 8.71% of those 27,300 rental properties (2,377 properties) are lone parent households.

It is true that the Governments introduction in 2013 of the Help to Buy scheme, where first time buyers only needed a 5% deposit, changed the perception of peoples’ ability to buy without having to save ten’s of thousands of pounds for a deposit. However, it might surprise you that 95% mortgages were re-introduced within six months of the credit crunch in late 2009, so again it comes down to people’s own perception. Many of the younger generation think they won’t get a mortgage, so don’t even bother trying.

It’s still a fact that once you start renting it becomes that much harder to save for a deposit regardless of the size; interestingly seven out of eight renters polled by Halifax refuse to sacrifice the quality of accommodation they currently live in to reduce the amount of rent they pay in order to save for a deposit.  This is the crux and the real reason why people aren’t buying but renting and why demand for renting will continue to grow in the future, which is great news for landlords. Nottingham tenants can upgrade the quality and size of the property they live in for a minimal rent increase. If you had to make that jump when buying, the monthly mortgage payment increase would be considerable more.  Without any social pressure and better quality rental properties compared to a decade ago, the next UK generation will become a nation of renters , as the UK becomes more like Europe where renting is ‘the norm’. Who is going to supply all these properties to rent? Landlords!

Whether you are an existing landlord looking to grow your portfolio or looking to become a ‘first time landlord’, my thoughts are take advice from as many people as possible. However, as the majority of landlords buy their buy to let properties in the area they live, you will need specific advice about Nottingham itself. For such advice and opinion please email me on Jaclyn.bartlett@centrickproperty.co.uk