In stark contrast to the Doom & Gloom being spread by
the national media, research recently carried out by Sheffield University predicts significant
growth of the private rented sector in the coming decades
By their estimates, the rate of home ownership nationally will fall to
50% by 2032 (today it is 59.8% in Sunderland), while the rate of private sector
renting will increase to 35% (it stands at 12.1% in Sunderland today)
Looking at the figures for Sunderland this represents a hugely significant change, however I can understand why this may turn out to be the case
Sunderland property values have remained pretty flat over
the last six years, however so have average wages/salaries
What has changed in
recent years is that following the Mortgage Market Review it is much harder to
get a mortgage, which has served to push home ownership further out of reach
for many, at a time when the stock of council houses has fallen significantly
Rather than building more council houses, recent
government efforts to fix the deficiency of affordable housing have focused on
those who want to buy a home, ranging from Help to Buy and their much vaunted
Help to Buy ISA, and Starter Homes Scheme, an initiative offering a 20%
discount for first time buyer
Unfortunately none of this matters if you are unable to
save for the deposit...
Currently 14,550 households are living in private rented
accommodation in Sunderland however if the above predictions ring true (based on
no change in the total number of households but just a shift in the tenure of
the existing housing stock) then that figure could rise to over 41,000 households
So whilst it appears Sunderland “Generation Rent”
youngsters will continue to rent and to not to buy for the reasons set out
above, Sunderland buy-to-let investors can be heartened by the projections of
greater rental demand…however they may be faced with increased competition both
from new private investors entering the market and possibly also the financial institutions
Faced with the new rules on tax, more and more Landlords
will be looking to move away from the previous honeypot of Central London and
the Southeast, because its higher prices meant lower rental yields
More and more investors will look further afield into the
‘provinces’, including Sunderland
It is also likely that as predicted elsewhere on the
blog, there may be an increase in Build to Let activity with institutional
investors wishing to capitalise on this increased demand by building new homes
specifically to rent – I remain skeptical about how significant an impact this will
have on Sunderland
Faced with the ever changing market and legislation you must take a more
considered approach to your existing and future portfolio
The balance of capital growth and yield, especially in
this low interest rate world we live in, means Sunderland landlords need to do
more homework to ensure the investment in property gives the desired returns
both in the short and long term
As always I make myself available for a free, no obligation chat to anyone looking to learn more about the Sunderland property market - whether you are an existing investor with property in Sunderland or are just considering it - give me a call on 0191 567 8577 or email neil.whitfield@belvoirlettings.com
