Last week the Department for Communities and Local Government published the annual English Housing Survey, a summary of the state of the housing market and housing stock in England in 2015/16.
The most significant headline finding was that home ownership has fallen to its lowest level since 1985. The proportion of homes in England owned by their occupiers stands at 62.9%, compared to 63.6% in 2014/15. The trend for lower home ownership looks less and less like a short-term dip and more and more like a lasting change to the market, having been at similar levels for three years, falling from a peak of over 70% in 2003.
The beneficiary of the fall in owner occupation has been the private rented sector, which has doubled since the early 2000s, now accounting for 4.5m homes – 20% of the total stock. The rise is driven by younger people, with almost half of those aged 25-34 renting privately, and many of these not expecting to buy their own property in the near future. With the survey also finding that those who rent privately spend a much greater proportion of their income on housing costs than others, delaying the point at which they might save enough to buy, and that home ownership is ever more concentrated amongst older people and ‘baby boomers’, the long-term future of the property market must be for a greater proportion of people renting privately.
This fact has been recognised by the government, and last month’s Housing White Paper signalled a move away from the goal of higher levels of home ownership. The government is now committed to measures supporting the ‘build to rent’ sector, including pressing councils to grant planning permission more easily. It is consulting on other proposals to support such investment.
Given the expectation of higher levels of private renting, promised government support, and the personal financial benefits of owning your own home (private renters spend an average of 35% of their income on accommodation costs, versus 18% for those with mortgages), the incentive to buy property, whether to live in or let out, is clear. Of course, as the English Housing Survey implies, fewer and fewer of us feel able to do so, the major barrier being access to finance. If you are struggling to find conventional finance to build to rent, buy to let, or buy to occupy, Tiger Bridging might be able to help.
With more voters renting privately, governments are likely to increase regulation on landlords. The English Housing Survey finds the private rented sector lagging well behind socially rented properties with regard to environmental standards. Only 26% of privately rented property reaches bands A-C in energy efficiency, little over half of the proportion of social housing. Both Theresa May and the Labour party have been arguing for better standards in the private rented sector, and now might be the time for landlords to consider investing in improving their stock. For this reason, many landlords are exploringe the bridging finance option. A brigding loan to refurbish a property, will not only aid compliance with modern energy efficiency standards, but also increase property values and reduce potential void periods through increased property desirability.
As small relief to commercial property owners, a recent Supreme Court ruling means that business rates – which will be increased for many from 1st April – cannot be levied on properties that are being refurbished; giving further motivation for investors to upgrade their stock.
This article was written by Matthew Dailly, Managing Director of specialist bridging loan company Tiger Bridging Ltd.
About Tiger Bridging:
Tiger Bridging is a specialist bridging finance provider with over a decade in the market. They provide short term property funding solutions across the whole of the UK, offering bespoke and flexible lending terms.
Their funding is free from the restrictions imposed by larger institutions or the mainstream lenders. Their small stable of valued and fast-moving investors, complemented by a select group of hedge funds, provide a steady and reliable flow of capital to clients. Their culture is bespoke and their attitude is proactive. If the deal makes sense, they can get the funding, regardless of the credit status of the client.
Company Name: Tiger Bridging Ltd
Contact Person: Matthew Dailly
Phone: 0207 965 7261
Address:Kemp House 152 City Road
Country: United Kingdom