Nowadays, as house prices have risen, so the cost of moving has jumped noticeably, to the extent that many people are thinking twice about uprooting to another house. And it seems that the cycle is changing, with more people expected to be living in rented accommodation; around one in four by 2021, according to a forecast by real estate consultancy Knight Frank.
Most of the new renters will be relatively young, having decided that it takes too long to accumulate funds for a deposit. However, there are other ages that will also see an increase, notably as pensioners look to realise the gains accumulated from living in the same house for decades, and not having to worry about maintenance any more by becoming a tenant.
The projected increase translates into 1.14m new households generated between 2016 and 2021, which on current housing output projections looks to be something of a stretch, especially as some private landlords have been chased away by recently introduced financial penalties for multi-ownership. An extended level of housing stock for rent will have to come from the still relatively embryonic build-to-rent sector, with special emphasis on multi-housing to make the most of the limited space within urban areas.
So who is going to build all these new homes? At long last there is a conduit whereby institutions looking to make their money work harder can get involved. Telford Homes (TEF) is accelerating its forward funded contracts with the likes of M&G Real Estate, while real estate investment trusts (Reits) are coming to the market with a view to building up a portfolio by purchasing houses owned by housing associations, which can then build more homes.
There remain two sticking points, though. The building sector remains short of skilled labour, and while there are more apprentices, this is hardly scraping the surface. There is also the question of imported labour, something that has attracted a good deal of uncertainty given that freedom of movement is a major sticking point in Brexit. The second key factor is the planning process. It has at last been recognised in the government's latest white paper that this is an issue. Various proposals have been made to speed up the planning process, but by and large these are still at the debating stage. And with Brexit and the government's very survival taking precedence, it is hard to be enthusiastic about all the proposals made being put into practice, certainly in the short to medium term.
The need for more rented accommodation will also be greater because of the lifestyle change that young couples will be making by opting to rent. A couple may be happy with a single bedroom, but when it comes to living somewhere bigger to start a family, it will be extremely hard to leave the rental sector because of the cost. So moving from a one-bedroom apartment to a larger rental apartment will become more the norm.
Geography will also play its part as well. Many couples can afford to rent an apartment fairly close into London, but wouldn't have the resources to buy it. Conversely, in many areas outside the south-east, it is cheaper to pay the mortgage than the rent. What this means is that there will be a much higher proportion of demand in the very areas where space is at a premium.
Knight Frank's survey confirms this, with a fifth of tenants questioned confirming that they rent in an area they couldn't afford to buy in, and nearly a fifth claiming that renting is cheaper than buying. Still, nearly a third maintain that they are renting while they save up a deposit, but in many cases this would be very difficult. Savings after paying rent would be hard pressed to keep up with house price inflation. Interestingly, nearly one in 10 said they rented because they don't want the responsibility of owning their own home.
