Background

We have seen a tenure shift towards private renting. The size of the private rented sector has been increasing rapidly since the early 1990s. There are now 4.14m people renting privately in England. Savills expects the private rented sector to reach 5.7m by 2018.

Despite the rise in demand, the supply of homes to rent remains constrained particularly in well-connected city centres where you find the highest concentrations of people renting privately.

We employed YouGov to conduct a survey of 2,300 tenants renting in the private sector in major cities across England and Wales. 1,000 of the respondents were in London. Our sampling was designed to reflect the current structure of the rental market.

According to the 2011 Census, the biggest group of renters (33%) are aged between 25 and 34. They are closely followed by those aged between 35 and 44 which account for 24% of those renting privately. These older renters are the fastest growing segment, which suggests that people are renting for longer. The responses to these questions reflect the current provision in the rental market and current standards of accommodation. As such, the bulk of respondents would not be familiar with the professionally-managed amenities-driven blocks now emerging. We expect that a better quality private rented sector would prompt more people to rent through choice rather than necessity.

Can’t buy, won’t buy

The combination of high house prices and lenders' deposit requirements, means that the average first-time buyer has to save a deposit equal to nine months of income. This is reflected in the survey responses that show that the inability to afford a deposit was given as the most significant reason for renting across all market segments, but particularly among the under-45s.

Among older private renters, failing to meet mortgage criteria is almost as important as the inability to save a sufficient deposit. However, 33% of younger households between the ages of 18 and 24 rated flexibility and the need to move around as more important than other age groups. Many are likely to be students.

Lifestyle choice:

For some however, renting is a tenure of choice. 24% of people we surveyed choose to rent because it is less hassle and they like the flexibility, and a further 8% stated that they are renting because they choose to invest their money elsewhere. Among more affluent households, just over 30% cited flexibility as a reason for renting. Better quality rental stock with amenities aimed at improving renters’ lifestyle could push these numbers up over time.

Income spent on rent:

Despite high rents, London respondents spend 26.8% of their gross income on rent compared with 25.6% outside London. With rents so high relative to underlying wages, the question of how this is the case arises.

Data from the 2011 Census offers some clues: the average household contains 2.6 people in London but only 2.3 people outside of London. A higher rate of households sharing (32% of respondents in London compared to 20% outside) allows high rents to be split amongst more individuals. This has allowed rents to continue growing well beyond affordable levels determined on a simple rent to wage basis.

Taken from
Spotlight: What do tenants really want?