Over half of UK homes will be rented by 2032 according to predictions by the Intermediary Mortgage Lenders Association (IMLA).
The trade body forecasts that of all the 33.1 million residential homes (units) in the UK, 16.9 million will be privately or socially rented within the next two decades.
The report assesses the growth of the buy-to-let market and its impact on first time buyers with published figures highlighting the prevalent shift in the market. Since 2007, the private rented sector has grown from 14% to 18% of households whilst owner- occupation has dropped from 68% to 64% and social renting has also fallen. At its peak in 2003, 71 % of households in England were owner occupied
The current market is fuelling the buy-to-let boom. The lack of supply and heightened competition is disheartening many buyers and rising property prices and tighter mortgage lending is making home ownership more unachievable for many. Whilst thereport suggests numerous reasons behind the increasing popularity of renting, the lack of new houses and buyer frustration is thought to be the biggest culprit.
But although buyers have struggled, landlords have benefited from lower interest rates and quantitative easing. BTL mortgages have financed 32% of the additional 1.31 million houses in the private rented sector since 2007, with the remainder made up of cash or commercially funded purchases and properties rented out by their existing owners.
The report said that if current trends continue, the majority of houses will be renting in the private or social sectors by 2032 – a shift that hasn’t been seen since the early 1970s.
Already homeownership is lowest among the younger generation. Between 1991 and 2012/2013 homeownership among 16-24 year olds in England dropped from 36% to 11%, compared to a 67% to 40% decrease in 25-34 year olds