Tenants want to buy despite squeeze on confidence
19th March, 2018
Two thirds of private tenants in London (64%) would rather own than rent, however, more than half (52%) feel the possibility ownership has decreased over the last year, according to research from KFH.
While the vast majority of private tenants in the Capital (71%) are happy living in a rented home, only a quarter of renters (25%) want to stay living in long term rented accommodation.
The research, the London Tenant Barometer 2018, was produced by KFH to gauge tenant sentiment and expectations regarding the rental market across London, the UK’s largest individual private rented sector (PRS).
On average, tenants expect to continue renting in London for a little over four years (4.2 years). Nearly half (48%) expect their rent to rise over the next year; just 2% expect rents to fall. Overall, the expectation among renters is that rents will rise 1.1% on average over the next twelve months.
Carol Pawsey, Group Lettings Director at KFH, said:
“The desire to own a home does not appear to be diminishing among London’s renters and schemes like Help to Buy, increased mortgage availability and changes to stamp duty have helped ease the path to ownership. But high buying costs mean many expect to rent for the foreseeable future and want property that adequately meets their expectations. It’s therefore important that landlords, PRS portfolio owners and build to rent developers understand the demands of their customers.”
The highest priority among tenants when choosing property is rental price. Nearly four in five tenants (77%) felt this was important when choosing their current property. The area of London was the next highest priority (65%) with property size and proximity to transport links the next most important (51% and 47% respectively).
Some of the lowest priorities among tenants are shared inclusive amenities such as gyms, cinema rooms and entertaining areas (5%). Good quality mobile phone reception (7%) and high internet speed (12%) were also some of the lowest priorities.
Carol Pawsey, added:
“In recent years we’ve seen a rise in the number of new developments offering features such as high-speed internet and communal or shared facilities. These are often seen as a way of attracting tenants and standing out from the competition, however, our research suggests developers need to look carefully at what impact these features will have on their bottom line and whether they will make a real difference to the appeal of their properties. It’s important they don’t lose sight of what drives tenant decision making more than anything else – price and location.”
PRS tenant demographics
The findings also showed that on average PRS household in London are home to 2.1 rent paying tenants with each tenant paying £775 per month in rent – equating to an average property rent of £1,600 per calendar month. The average age of a PRS tenant is 37 years old and nearly a third of tenants (32%) have non-rent paying dependents living in their household.