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The simple answer could be "yes, unless more properties are built". However looking at research on the historical growth and future projections, there are some very interesting facts to consider. Firstly, with reference to 2006, let us look at the growth over the last 15 years, and the projections for the next 15 years.

Since 1991 there has been an estimated increase of 13% in UK homes from a figure around 22.4 million in 1991, to a projected 25.3 million for 2006. A similar rate of growth is predicated up to 2021 with an estimated 27.9 million homes required. This rate of growth should be sustainable providing that sufficient land and property are made available for development or redevelopment.

However with respect to the rental sector it is interesting to explore the underlying factors behind the projections of growth in homes required, of which there are probably two key factors. Firstly there is a continuing trend of net immigration into the UK. For example in 2004 it was reported that over 140,000 people were granted British citizenship and this number has been increasing each year since 1999. Additionally most new immigrants are of a relatively young age (recent statistics identify around 80% between 15 and 44 years of age). It is likely, although no evidence could be found, that a higher proportion of immigrants will seek rental accommodation.

Secondly there is a reduction in the average number of people living in a household, and this trend is expected to continue over the next 15 years. According to UK research the average size of a household in England (data not found for other countries) has fallen from 2.47 in 1991 to a projected 2.29 in 2006 and 2.15 in 2021. To look at it another way, over the 15 years from 2006, the number of homes required are projected to increase by 10.4%, whilst the population (based on average per household) will increase by only 3.75%.

So what does this really mean for the rental sector? Simply put, if we expect a 10% increase in homes built over the next 15 years, and a reduction in the average persons per household, then there is likely to be a proportional increase in rental properties required with the focus on smaller homes (such as flats or apartments). However for the private rental sector there could be an even greater impact if it is assumed that the government does not invest in expansion of social sector rental properties. Consider the following argument:

In 2005 there was an estimated 6 million rental properties, of which approximately 2.4 million were reported to be in the private rental sector. If we assume that a projected 10.4% increase in households by 2021 applies equally to the rental sector this would indicate a further 620,000 rental properties are required (social plus private). But if the total social housing stock does not increase then this demand will fall onto the private sector with an additional 620,000 homes required, representing a 25% increase on 2005 (when private rental homes were circa 2.4 million), or to put it another way an average of 40,000 new private rental properties to rent will be required each year. Is this an interesting opportunity for the private landlord?

Copyright Simple2rent Ltd 2006

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