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Rental Market Set to Expand by 1M Households by 2031

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    Demand for Rental Homes Set to Soar Even Higher in the Next Decade

    A new research article from property experts Savills has revealed some of their future forecasts for the build-to-rent market.

    According to the report, they predict an additional 800,000 to 1,000,000 households will be renting in the UK by 2031. This increase in demand is good news for those considering buy-to-let investment.

    They believe the most significant increase in the number of households privately renting will be within the 25-34 age bracket, making up an additional 370,000 households between 2021 and 2031. When it comes to the 35-44 age group, there will be 229,000 additional households renting.

    This future demand forecast was calculated using data relating to the propensity of different age groups to rent and government household projections.

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      Couple signing up rental contract with the estate agent

      Can Supply Keep Up With Demand?

      There is already a supply-demand imbalance in the private rental sector across the UK currently, and given these projections, it seems this shortage is likely to continue.

      Currently, the supply of private rental homes is static, and available rental properties have significantly reduced in number in recent years. This is due to several factors, including the fact that tenants stay in properties for longer, meaning fewer are becoming available to re-let.

      More renters are also staying in the market due to high-interest rates, constraining their ability to buy their property and keeping tenant demand high.

      Savills report that to meet their future projected demand, there’s a need for an investment of £300 billion.

      Further reading: Find out more about the new build market with our guides to new builds in Manchester, or find out if buying a new build is a good investment.

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      English suburbs; Welling, Bexley, London England, May 2019 view of typical english suburban housing - editorial use only

      Is the Future of Property Urban or Suburban?

      Savills’ research also outlines where they believe these new private rental homes should be located to meet the projected demand effectively.

      The report states that 550,000 homes will be needed in suburban areas, 360,000 homes in urban areas, and 110,000 homes in rural areas. The most investment will be required in suburban areas, with a forecast amount of £160 billion.

      Formerly, urban areas were usually targeted for the supply of new rental homes, as young people who are more likely to rent are drawn to city centres such as London property investment. For this reason, investors will often look for flats for sale in major cities and central areas. However, renting is now becoming increasingly popular with families. Suburban areas can also be more affordable than urban areas, widening their appeal to younger renters in recent years. Rental demand is now substantially more robust in suburban locations (54%) than urban ones (35%).

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        What Does This Mean For the Buy-to-Let Market?

        The shortage of available rental properties can be stressful for tenants searching for a home. With this in mind, more buy-to-let landlords entering the property investment market and expanding their existing portfolio would be welcome ways to help reduce pressure on the market.

        Looking at the current market, demand has soared, suggesting consistent tenancies. Rental costs have risen rapidly, with the current UK average standing at £1268, meaning there are also sufficient incentives on the landlord’s side to enter the market.

        Learn More: Take a look at our latest area guides covering topics like investment property available in Huddersfield and buy-to-let property in Dundee.

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        Jessica Ferris

        Jessica is a property content writer at RWinvest. Keeping a close eye on the UK property market, Jessica helps our readers stay informed and up to date on the latest market news and statistics.