Families and older tenants now form a larger proportion of private renters

Countrywide Residential Lettings

Monday, February 10, 2014

Changing tenant demographic

There has been a significant change in the age and type of tenants living in the private rented sector in England, Scotland and Wales, according to analysis from Countrywide Residential Lettings, the UK’s largest lettings agency.

The number of people aged over 30 living in rented accommodation in January 2014 increased 5.8% compared to January 2013. This age group now equates to 59.3% of all tenants. The number of tenants in the ‘41-50’ age group grew more than any other over the same period of time, up 2.2% year-on-year and this group now forms 16.2% of all tenants.

Prospective property buyers who are unable to get on the housing ladder by the age of 35 are increasingly living in the private rented sector for longer. There are varying reasons why people rent for longer but many choose to do so because they enjoy the flexibility it offers their life style, especially in terms of job mobility.

The number of families living in the private rented accommodation has also increased in most regions, with London seeing the greatest year-on-year increase of tenants in the Capital living with children, followed by the South West up 5% to 31% and the North West up 3% to 28%.

Whilst a growing number of over 30s and families are renting for longer, the opposite can be said for the younger generation, a group that has declined 5.8% year-on-year. This is partly due to the launch of the Help to Buy scheme, which has helped thousands of people to get on or move up the housing ladder. The decline can also be attributed to rising living costs, job instability and other macro-economic factors which are leading to an increase in younger people living in the family home for longer or returning to the family home in order to save money rather than pay rent.

According to the ONS, 22% of 20-34 year olds in London are living at the family home, up from 18% ten years ago. However, London has the lowest percentage of young adults living with their parents than anywhere else in the country.

A regional perspective

The UK average monthly rent in January 2014 was £859, up 0.6% month-on-month and 2.9% year-on-year. Over the past 12 months, average monthly rents have increased in 8 out of 10 regions, with Scotland seeing the most significant increase up 11.7% year-on-year.  The average monthly rent in Scotland was £639, an increase of £67 since January 2013. The East Midlands and the North East also saw significant year-on-year increases in average monthly rents, up 5.7% and 5.5% respectively.

Arrears

Arrears have fallen year-on-year in all regions apart from Scotland where they increased 2.6%. The North East saw the greatest fall in arrears down 1.9%. Given the average wages in Scotland rose 2.1%, a rise matched by the increase in the cost of living, and the average monthly rent has increased 11% year-on-year, arrears have increased as household budgets have become outstretched.

Table A: Variations in rents and arrears data in England, Scotland and Wales for regions

Region

January 2014 Average rent

December 2013 Average rent

Rent year-on-year increase / decrease

January 2013 Average rent

Arrears >30 days (% rent roll £)

Greater London

£1,143

£1,133

4.3%

£1,096

7.9%

Central London

£2,526

£2,315

4.8%

£2,411

7.2%

East of England

£841

£796

3.3%

£814

6.9%

South East

£1,079

£1,122

1.4%

£1,064

5.1%

South West

£735

£756

-0.4%

£738

4.8%

East Midlands

£594

£585

5.7%

£562

7.3%

West Midlands

£683

£678

-2.6%

£701

5.9%

Wales

£628

£632

-0.2%

£629

6.0%

North East

£616

£600

5.5%

£584

4.7%

North West

£608

£622

-0.8%

£613

8.9%

Yorkshire & Humber

£635

£619

5.0%

£605

5.9%

Scotland

£639

£637

11.7%

£572

8.2%

Total

£859

£854

2.9%

£835

6.5%

Commenting on the Index, Nick Dunning, Group Commercial Director at Countrywide plc, said:

“Help to Buy is having a bigger impact on the housing market in the North of England than in other regions across England, providing younger people with the opportunity to buy their first home. Over the past nine months in the North East, the number of Help to Buy Equity Loan sales equated to 27% of all new properties built in the region, whilst in London the number of Help to Buy Equity loans was equal to just 7% of new housing completions. The strength of the housing market in London and the South East means that developers don’t have to rely as much on Help to Buy to sell homes.”

“The large increase in rents in Scotland over the past year could partly be due to the fact that tenant fees can no longer be charged in Scotland. The cost of carrying out the work by the letting agent is instead passed onto the landlord who subsequently covers their costs by charging higher rents.”

-Ends-

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