BUYASSOCIATION: SURPRISE RISE IN UK POPULATION COULD INCREASE RENTAL DEMAND
Recent statistics have revealed that the UK population is rising faster than expected, and the research shows why this is likely to lead to more tenants seeking rental homes.
The latest figures from the Office for National Statistics (ONS) revealed that the UK population could hit 73.7 million by 2036, which means a rise of 6.6 million people between 2021 and 2036.
The current forecast shows how the UK population could reach 70 million as soon as 2026, which is 10 years sooner than had been previously expected. The ONS expects net migration of around 6.1 million people by 2036, along with around 500,000 more births than deaths.
This latest projection has already led to discussions in Parliament on ways to reduce the net migration level to keep the UK population under control. Inevitably, such a steep rise will mean even greater demand within the UK housing market; but specifically, it is also likely to create steep growth in the number of privately renting tenants.
UK population growth in all age groups
All age groups are expected to increase in number across the UK population, with the ONS predicting that there could be an additional one million people aged 85 and above living in the UK in 12 years’ time.
However, according to the latest projections, the number of 25- to 34-year-olds could more than double compared with predictions made in 2016, with significant growth in the age category expected. As this is the age group most likely to rely on the private rented sector, landlords can expect even greater demand on their properties in the coming years.
According to Knight Frank, around 40% of 25- to 34-year-olds currently rent – and the average age that people get onto the property ladder continues to creep upwards. With tenant demand already at extremely high levels across the country, this could be set to climb even further.
As Knight Frank points out, purpose-built rental properties could begin to play a more major role, as this is the age group also most likely to live in this accommodation type. Increasingly, today’s renters are seeking higher quality accommodation, with additional amenities included to give a more long-term, lifestyle option.
“For policymakers, the shifting age profile set out in the new projections highlights the need to plan appropriately for the provision of appropriate housing types and tenures which align with the needs of a changing demographic landscape,” notes Knight Frank.
More than a third of people rent
The latest figures from the English Housing Survey in 2022 showed that 35.7% of the UK population lived in rented accommodation. A further 16.6% of the UK population lived in social housing of some form, while the remainder either owned their own home or lived in alternative accommodation.
While this 35.7% is made up of many age groups, as Knight Frank points out, people between the typical post-graduate age and mid-30s are more likely to rent. What’s more, this demographic is more inclined to select either a city centre location, or a location where access to employment and amenities is easy.
With property prices and rental prices becoming more expensive, this is pushing more people to look at commuter towns as an affordable alternative to some of the more desirable city centres, such as London, Manchester and Birmingham.
According to Rightmove, there has been an increase in recent months of tenants considering rental homes outside of cities, with 54% of renters across 10 major cities looking to move elsewhere during 2023. This is 3% higher than the number of renters seeking to leave their cities in 2022.
The data shows that in Birmingham in 2023, 57% of renters enquired about homes away from the city centre, up from 54% in 2022. In Manchester, this figure was 62%, up from 57%, while 45% of Liverpool’s tenants were looking at alternative locations, compared with 43% in 2022.
This opens up a greater range of options for property investors looking to focus on the most high-demand areas of the UK. While city centres will always have a high level of appeal for tenants, there is now a broader scope of locations to consider that still achieve high tenant demand.