Buying a property is cheaper than renting in every area of the UK, a recent study found, and yet a growing number of people are choosing to rent. But why is that?
Research from Santander Mortgages shows that owning a home in this country typically costs £2,268 a year less than renting one, but an increase in high quality rental properties is, to an extent, deterring many would-be property buyers from acquiring property, according to Property expert Kate Faulkner.
The PRS in England and Wales, which has more than doubled in size since 2002, accounted for 20% of households in the recent English Housing Survey, and while Faulkner accepts that this is partly due to increased demand, she firmly believes it is hard to ignore the improvements in the quality of rental stock.
Faulkner makes the claims in a report on the growth of the PRS commissioned by the TDS Charitable Foundation.
She said: “To understand how the PRS has grown, we need to be able to see beyond headlines about house prices to know what’s really going on.
“The main contributing factors are – as is commonly understood – a lack of social housing provision, and house price growth outstripping wage increases for many, but that’s not the whole story.
“If we look at a more local level, there are places where affordability has increased but the number of first-time buyers continues to decrease, suggesting house prices and demand aren’t the only forces at play.
“Over the same period that the PRS has gone through dramatic expansion, it’s also improved considerably. Standards of rented properties are now arguably higher than ever before. The increased quality of accommodation has reduced the ‘need’ to buy.”
Faulkner points out that “good quality” rented properties are often much cheaper and more easily accessible than purchasing property, especially in the short to medium term.
She continued: “When high standards of accommodation are available, with the added bonus of flexibility, it can make an enticing proposition.
“There is also caution in some parts of the market, with potential buyers lacking confidence that house values will continue to rise.
“That fear, coupled with tougher restrictions on buy-to-let mortgages putting off landlords from entering or continuing in the market could lead to situation in the PRS where demand is increasing and supply is decreasing.
“More research is required into the nuances of the UK’s housing market and stock to understand affordability, renting landscapes and ultimately; to make more effective legislative decisions.”