Despite the fact that UK house prices are continuing to slow, with yesterday’s figures from the Office for National Statistics (ONS) revealing that UK house prices fell from 5.6% growth in February to 4.1% in March, affordability – and, most particularly aspiring homebuyers’ struggle to get a foot on the property ladder – remains by far the biggest issue in the housing market, according to leading experts.
With inflation at a near four-year high and real wages falling, many consumers are currently facing a spending squeeze and that is leaving a number of would-be homebuyers with little alternative but to rent property instead, and that inevitably means that the private rented sector will continue to play a key role in housing people across the country.
John Goodall, CEO and co-founder of buy-to-let specialist Landbay, said: “While it may look as though house price growth is beginning to slow down, affordability remains a key concern for many aspiring homeowners struggling to get a foot on the ladder. Furthermore, rising inflation and recent warnings from the Bank of England that a year of falling wages lies ahead means we’re unlikely to see any immediate relief.
“Now, more than ever, the private rented sector will be relied upon to support those unwilling or unable to buy a house outright.”
As the general election draws closer, Goodall hopes to see “some ironclad commitments” on housebuilding from policymakers to help boost supply of housing in the PRS.
He added: “Encouraging institutional investment in large-scale developments, specifically designed to rent rather than buy, will help to control house price growth while also improving living standards for those relying on a well-served buy-to-let market.”
Richard Connolly, CEO of Rentplus, agrees that delivering more housing - for both ownership and rent - is crucial to help cool house prices, as well as rental values.
Private rental prices paid by tenants in Great Britain rose by 1.8% in the 12 months to April, according to the ONS, led by gains in England, where rents grew by 2%, while they were up 0.7% in Wales.
Rental prices in Scotland remained unchanged last month compared with April 2016.
Connolly commented: “The ONS figures underscore that working people for whom the private rented sector is the only option have seen their rental costs surge since 2016 while their wages have failed to keep pace with inflation.
“The case is clear, unless we boost the number of affordable homes in the UK even more people will become trapped by the increasing costs of private rented accommodation; their future housing options will be severely limited with access to affordable rented homes ring-fenced to those in greatest need whilst the inability to save for a deposit to buy their own home will continue.”
The recent housing white paper mapped out a pathway to delivering more affordable housing products for both ownership and rent, but Connolly says that the question is “how can construction be accelerated so the country is once again building at scale?”
He continued: “All the main political parties have pledged to increase housing delivery, but to truly meet demand and achieve the projected numbers required we must harness the power of private capital.”
Connolly believes that “affordable Rent to Buy” offers long-term affordable rents along with an opportunity for aspiring homeowners to purchase.
“We hope that whoever forms the next government, adopting affordable Rent to Buy becomes a key part of housing policy so that there is a wider range of housing options included as a matter of course in new developments to help those stuck in private rented accommodation into affordable housing,” he added.