The expected growth in population from 60 to 70 million over the next 15 years will drive a continued increase in the number of new households being formed and this in turn will require more homes to be provided for owner occupation, social housing and especially the private rented sector.
The increase in the number of people needing a home over the next few years and the lack of property stock we have in the UK to meet this demand, is already showing in the private rental sector, especially in London. Over the coming years, it is likely the shortage of homes in the UK is going to continue to be experienced via the private rental market rather than in owner occupation, and it will get a lot worse before it gets better.
This won't always relate to rising rents as we now know they are typically tied to wage inflation, but once the economy turns the corner and wages start to increase, it is likely tenants will start competing via price for the best properties, i.e ones in the best condition and location.
Overall the future of private rental sector returns for investors looking for income rather than capital growth, things are looking good. There are some potential threats from institutional investors, but good properties with landlords willing to maintain them well and let them legally, are likely to see demand outstrip supply into the future.
Source for information: Belvoir Newsletter summer 2012
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