Many people tend to hold off on buying property during times of uncertainty and that appears to be precisely what is currently happening amid growing Brexit turmoil, which could spell “good news” for private landlords as more people choose to rent than risk entering the property market.
Even with Brexit uncertainty, most commentators are predicting modest, single-digit house price growth in 2019, but expect to see relatively strong growth in rental values.
He said: “I expect the upwards trend in rental values isn’t likely to change anytime soon, nor will the demand for private rental properties.
“A rise in interest rates from the current near all-time lows, coupled with high deposit levels, would make home ownership affordability even more of a challenge – especially for first-time buyers.”
As a major tenant referencing and specialist insurance provider that holds one of the UK’s largest and most up-to-date pool of data on agreed rental price trends, based on newly agreed tenancies, well positioned to assess what is going on in the PRS, especially as far as rental prices are concerned.
Latest data shows the average monthly rent as £921 (£763 when London is excluded from the UK) in December 2018, up 1.5% year-on-year, or £14 per month.
But this rate of growth still remains below the UK inflation rate, last reported by the Office for National Statistics (ONS) at 2.3%.
Totty continued: “Without a large deposit, those entering the property ownership market could face longer-life mortgages, with many providers now extending their maximum term on mortgages to 40 years.
“Our data shows the average age of a tenant today is 32 years old – making it a real possibility that those same people may be dealing with a mortgage that matures post-retirement.
“So, as people are aware that making what’s likely to be the biggest purchase of your life at just the wrong time in the cycle can be a huge risk, and are unsure how mortgage rates, the UK economy and their own jobs will be affected by Brexit, many are choosing to wait until the dust settles.
“This means private landlords still have something to be optimistic about, despite being buffeted by a perfect storm of increased taxation, more regulation and a more interventionist government, whose near-miss at the last general election demonstrated that younger people will vote if they believe a party will improve their lot.”