Thursday, July 11, 2013
Older generation rents for life as under 25’s stay at home for longer
• 6% year-on-year growth in the number of tenants aged over 50
• 7% year-on-year decline in the number of tenants aged under 25
• Average length of tenancy increases to 19 months
• Average rents rise 1.2% year-on-year, with Scotland seeing the greatest increase
Older generation: Analysis from Countrywide plc, the UK’s largest lettings agency, shows a growth in the number of tenants aged over 50 living in private rented accommodation in Q2 2013. Most regions saw a rise in the number of over 50’s renting properties with East of England and East Midlands recording the greatest increase at 3% year-on-year, followed by Wales and London up 2%.
Younger generation: The under 25 age group saw an unexpected 7% decrease in the number of tenants renting properties through Countrywide in Q2 2013 compared to 2012. Weak wage growth and the rising cost of living is likely to be behind the younger generation moving back into the family home after university to save for a deposit to buy their first property. The significant decline in tenants aged under 25 is greatest in Wales where there has been an 8% decrease, followed by the South West and East of England (-3%) and South East (-2%).
Length of tenancy: The average length of tenancy is now 19 months in the UK, a slight increase on 2012. Central London has the highest length of tenancy at 22 months and Wales the lowest at 14 months. With families making up a third of tenants renting a property through Countrywide, the decision by Nationwide Building Society to extend the tenancies they will allow landlords to offer tenants, is welcome news for those who like the security of renting a property on a long-term basis.
Table A: Mix of age profiles of tenants renting in England, Scotland and Wales
|Region||June Year-to-Date||Under25||25 to 30||31 to 40||41 to 50||Over 50|
|East of England||2012||18%||26%||26%||18%||12%|
|Mix grand total||2012||19%||27%||27%||15%||12%|
|Underlying year-on-year decline / growth in mix||-7%||1%||-1%||5%||6%|
Average rents and yields by region: The Countrywide Quarterly Lettings Index also showed that the average monthly rent increased 1.1% year-on-year in Q2 2013 to £845pcm. Scotland saw a 6.7% rise in average monthly rents in Q2 2013 compared to Q1 2013, the greatest increase of any region. Yields remain strong across England, Scotland and Wales with Wales seeing the highest yield at 6.6%, followed by Midlands (6.5%) and North (6.4%). Arrears fell on average by 0.8% year-on-year but increased in Scotland 2.4% and Wales 2%.
Table B: Variations in rents, yields and arrears data in England, Scotland and Wales
|Region||Average Rent Q2 2013||Average Rent Q1 2013||Average Rent Q2 2012||Yield %||Arrears 30 days (% rent roll £)|
|East of England||£821||£814||£788||6.20%||6.90%|
Commenting on the Index, Nick Dunning, Group Commercial Director at Countrywide plc, said:
“Renting a property was previously a choice for the younger generation as they saved for a few years to get on the housing ladder. However, there is currently a demographic change in the UK rental market with people renting for longer and in some cases for life. Reasons vary and for some it is because they cannot afford to save a deposit to buy their own home but others choose to rent and enjoy the flexibility it gives them especially in terms of job mobility. Tenants aged 41 and over now equate to nearly a third (29%) of all of those renting a property through Countrywide in England, Scotland and Wales and this figure is likely to rise in the future.”
“Renting is a flexible and relatively hassle-free way of living which suits many people's lifestyles. It allows them to settle in a location where perhaps they couldn’t afford to buy but they enjoy living in. However, with a growing population of lifetime renters and more 18-25 years olds having to live with their parents for longer because they cannot afford to rent or buy, increasing the amount of good quality, affordable rental accommodation is needed to meet this demand. With banks making it easier for landlords to offer longer tenancies, more competitive buy-to-let mortgage products available and demand for rental accommodation outstripping supply, now is an ideal time for landlords to expand their portfolios and provide a more diverse range of affordable rental properties. ”
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