The private rental sector could account for 20% of the UK’s total housing stock by 2021, John Heron, managing director of Paragon Mortgages, predicts.
Speaking at the Land Data Great Housing Market Debate in London last week, Heron told delegates that the private rental market currently comprises 12% of the total housing stock, up from 8% in the late 1980s, but he believes this could change dramatically in the next 11 years.
Since the early 1990s the supply of private housing has expanded, mainly due to the boom in mortgage finance, and as a result the country now has a larger, higher quality, private rental sector.
He says: “We now have 12% of housing that is private rental, up from 8% in the late 1980s and the private rental sector could hit 20% by 2021.”
His prediction is an amalgamation of industry statistics but he says the sector is being constrained by a combination of dys-functional finance and in-trusive regulation.
Heron’s firm Paragon withdrew from the buy-to-let market two years ago, but the firm has hinted that with wholesale markets improving, it could return to lending soon.
Only a handful of lenders are still lending in the buy-to-let market in the wake of the down-turn. At the same time the Financial Services Authority plans to bring the sector under its remit.
With high LTV loans scarce and those that are around prohibitively expensive, first-time buyers are still locked out of the market, putting more pressure on the rental sector.
In this week’s Economic Trends, Grenville Turner, group chief executive officer of Countrywide, says that demand for lettings is out-growing supply as the next generation of home owners
struggle with deposits.
He says: “A record 48,332 new tenants registered for accommodation with Countrywide in the first three months of the year, with 4.9 tenants vying for every property.”