By understanding the key stats and data around the rental market as well as better understanding your target audience (eg. tenants) you will be able to make more informed decisions about new investments as well as how to ensure your current investment properties appeal to prospective tenants.
In this article, we outline 10 stats that we found both interesting and enlightening about the UK rental market.
#1 The number of households in the private rented sector in the UK increased from 2.8 million in 2007 to 4.5 million in 2017.
The number of rentals on the market increased by 1.7 million units (over 60%) in just 10 years. Many people are blaming the flailing property market along with out-of-reach house prices that mean people have to rent for longer.
#2 25 to 34 years age group represent over 35% of renters.
#3 In 1996/1997, 16% of 35 to 44-year-olds lived in privately rented homes. The latest results show this has risen to almost a quarter (24%).
With such high house prices, buying just isn't an option for many people. What this means is that the average age of renters is actually going up. Mature, experienced renters is a growing section of the rental market and landlords would be wise to take this into account.
#4 Families with dependent children now account for 24% of the market compared to 15% 20 years ago.
The types of households in the sector have also shifted over recent years. This next statistic in the renter demographics shows a massive increase in families renting. They now make up a quarter of the market. As a landlord then, making sure your property is appropriate for families will help open up this section of the market.
Related: A Guide to Renting to Students.
#5 UK rental prices have increased by 8% since January 2015.
#6 On average people in the UK spend 35% of their income on rent.
#7 However, if you look at just London, people are spending an average of 45%.
The unwritten rule that you should spend roughly 1/3rd of your income on rent goes out the window when you look at London. However, in the rest of the UK barring areas like London (and maybe the south-east), rent is actually quite affordable for most households.
#8 9% of tenants have been arrears.
This particular rental market stat surprised us a little. 1 in 10 tenants have failed to pay their rent in the past. Perhaps it was only a small amount they couldn't pay, perhaps they were going through a difficult transition. However, the fact remains that a strict tenant referencing process is needed to avoid those tenants that can’t, or won’t pay their rent on time.
#9 2/3rd of private renters had no savings at all and 41% of those that did had savings of less than 5,000.
A scary thing to consider but it goes some way to explaining the previous statistic. A lot of people are living pay-check to pay-check, and a tough month could see them easily falling into arrears.
Having high-quality property management software like Landlord Studio can help you stay on top of tenant communications and minimise this possibility.
#10 The average duration of tenancy for rented properties in August 2019 was 33.8 months.
Some good news to finish off. If you’re looking at getting into the rental game you can take encouragement from the fact that a lot of tenants avoid moving about. Moving is a hassle, there’s no doubt about it, and this shows in this statistic with an increase year on year from 29.5 months. As a landlord, you can take some comfort in the fact that there are plenty of quality and long-term tenants out there.
For developers and property investors, as well as buy-to-let landlords assessing stats like these could give you a better insight into who the target tenants are and what they actually want.
Not every property is suited to subletting and sometimes a landlords situation prohibits them from properly being able to manage a subtenant. Whatever your decision, whether you allow it or not, it's important to be aware of the following information.