Analysis by the Office for National Statistics shows that the number of single person households is expected to grow to 7.9 million within the next 8 years. This would be a rise of 727,000 in single households in that time, compared with a projected increase of just 80,000 more households in families. The result would be just under 6.6 million traditional families with children at home, barely a quarter of homes in England within a decade.
That rise would mean that single person households living alone eclipse families by some margin. Divorce, bereavement or lifestyle choice are all driving the trend. More middle age men are living alone after a family break up and more women are achieving financial independence. Families are getting smaller too – 88% of the extra projected families are likely to have just one child (all data from The Times 30th June 2020).
All this has profound implications for the housing market. The demand for rental properties is clearly going to grow, with many rental properties being suited to single occupancy, often being smaller flats and terraced houses.
As rental demand increases, supply seems unlikely to keep up, leading to increased rents – and landlords having a greater choice over tenants.
With interest rates looking set to remain low for many years to come, this supply and demand imbalance should tempt more private landlords to enter the market – but will it? Rental yields of 5%+ compare very favourably with the returns available from other forms of investment, few of which offer the re-assurance of a ‘bricks and mortar’ investment. However, the Government’s much debated ‘war on landlords’ and measures to favour tenants protection is making landlords cautious about increasing their portfolios and restricting the number of new landlords entering the market. That is also having the opposite of the desired result – driving rents upwards and pricing some of the most needy households out of the market.
The largest growth in households is expected to be the number of older couples living together. All adult households are expected to rise to 10.3 million by 2028, with two-thirds of that growth amongst couples where the oldest member is 75 or older. At that age traditionally homeowners would have paid off their mortgages and be living ‘rent free’.
Not any more. Increasing numbers of older couples are in private rented accommodation, and as pressure on rents increases, a larger slice of their pension income is going to be taken up by housing costs. These older couples make attractive tenants for landlords – with long term tenancies preferred and an income which is not dependent on continued employment. Age is definitely not a disadvantage when it comes to being a safe choice for landlords.
All this means that Buy to Let looks set to be a very popular investment choice for investors in the next couple of years, but with a few caveats. It is essential to buy the RIGHT property, in the RIGHT location, use the RIGHT letting agent and choose the RIGHT tenant. Trigg & Co can help you get ALL 4 of these things RIGHT FIRST TIME.
Come along and have a chat and explore your options. Whether you are a first time landlord or a portfolio landlord looking to acquire extra properties, our expert advice is free of charge and without obligation.