Demand for private rents set to rise

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by Gill Montia

According the UK Housing Review 2007/08, published by the Chartered Institute of Housing (CIH), the professional body for people involved in housing and communities, increasing numbers of households are moving into private rented homes.

The trend reflects the fact that average mortgage costs to income for first-time-buyers are now greater than in the height of the housing boom of the 1990s.

In the third-quarter of 2007, first-time buyers were typically using nearly 35% of their income to fund a mortgage, compared with 34% in 1990.

While both house prices and mortgage costs have risen sharply over the past decade, private rents have risen more in line with earnings.

Comparing equivalent properties, mortgage costs can be up to 64% more expensive than rental costs.

Across the UK, the private rented sector has grown by 21% over the past five years and according to Professor Steve Wilcox, the author of the review, some of the growth seen in the private rented sector is due to strong competition in the market and the broad choice of accommodation available.

Current expectations are for growth to continue because forecasts for both the increase in population (and the number of households) show demand continuing to exceed current and planned new house building in the UK.

However, Merron Simpson CIH Head of Policy, points out that an increase in the volume of privately rented homes needs to be supported by an increase in the quality of the accommodation.