Wednesday, 23 September 2015

The 10 Year Time Bomb For The Sunderland Private Rented Sector

Many people think the British obsession with owning your home started in the early 1980’s, when Mrs Thatcher allowed council tenants to but their council houses, under the first Right To Buy scheme

The growth actually started just after the Second World War

Looking at the country as a whole, in 1951, 30% of residential properties were owner occupied, then every ten years that rose incrementally to 39% by 1961, 51% by 1971, 58% by 1981, 68% by 2001 

After that it dropped to 63.4% by 2011 and continues to drop today

After leaving home, early to mid-twenties young adults tend to start to settle down and move out of the family home into their own home. They have a choice of either buying their first house, albeit with a mortgage, or decide to privately rent for the long term – bearing in mind that the Council House waiting list is measured in decades at the moment!

The ratio of people owning a house with a mortgage verses privately renting is an extremely important guide to what people are doing about their housing needs and their prevailing attitude to renting vs buying

With that in mind, within the next 10 years, I am predicting it’s entirely possible that there will be more people renting privately in Sunderland than own a property with a mortgage and that the British love affair of property ownership will fade as the decades roll on

This is a really important change in the way we live, as I explained to a local Sunderland Landlord the other day, knowing when and where tenant demand is going to come from in the coming decade is just as important as the knowing the supply side of the buy to let equation, in relation to number of properties built in the city, Sunderland property prices and Sunderland rental values

In the Sunderland area as whole, there are 14,552 households that are privately rented via a Landlord or letting agent versus 25,611 households that are owned outright and 33,525 owned with a mortgage

Based on this my prediction of the private rented sector exceeding the number of owned properties in 10 years appears to be outrageous!

However, when we look deeper, 84% of Sunderland properties that are owned outright are owned by the over 55’s and 75% of those 59,136 Sunderland households which are either own either outright or with a mortgage are now over 45

I would expect the over 55’s who own with a mortgage to be paying their mortgage off as they enter retirement as I would with some of the people in their mid/late 40’s

Meanwhile, at the other end, in the under 35 age range – the age when most people bought their first home in the 1970’s, 80’s and 90’s – only 9% of the 20,018 Sunderland households occupied by the under 35’s are owned by occupiers with mortgages, with 52% of that age group privately renting (the remainder are mainly living with parents)

If that trend continues with under 35 renters continuing to rent as they grow older it is entirely feasible for the number of privately rented properties in Sunderland to exceed the number of properties owned with mortgages

It can be seen that as the older generation pay their mortgages off as they start to get to retirement and the younger generation aren’t jumping on the property ladder like they were 20 or 30 years ago, it’s likely that the private rental sector will be required to take up the slack, as more and more people will want a roof over their head but will choose (or be forced) to rent rather than buy

This will create a polarization in the housing market between those, mostly older, households who own outright and those, mostly younger, households who rent

With Local Authorities and Housing Associations not anything like the same quantity of houses  that they were in the 1950’s, 60’ and 70’s (despite the government's recent promise to build 1 million new homes by 2020), Landlords appear to have good demand for their rental properties for many decades to come

The recent anti-Landlord measures imposed by the government, such as the changes to mortgage interest tax relief, should clearly be of concern to private Landlords, as is the commonly held fear that this government would prefer the Private Rented Sector to be run by a handful of large institutional Landlords, each with thousands of properties rather than having the industry made up of many private Landlords with small portfolios

If you are a Landlord or thinking of become a Landlord, and would like to read more articles like this or discuss any aspect of the Sunderland Property Market, then please contact me on 0191 567 8577 or email

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