One in three private tenants planning to buy next year, says Rightmove

One third (32%) of private tenants in the UK are planning to buy their first home in 2014, Rightmove reported this morning.

Nearly a quarter (24%) of those say they are looking to buy as a direct result of phase two of Help to Buy or have brought forward their plans to buy because of it.

One in five people (18%) currently living with their parents but planning to make the move to home ownership have also been influenced by the scheme.

But, said Rightmove, the shortages underpinning the housing market will not fundamentally change because of “a few months of Help to Buy”. The scheme is due to have a shelf life of three years, or 36 months.

The Rightmove report is published as new data from the ONS shows that the number of households in rented accommodation is now 34% of the total, up from 29%.
 
According to Rightmove, tenants in London and the south-east are keenest to buy, while those in the north-east and Scotland are the least likely, according to today’s Rightmove Consumer Confidence Survey, which questioned nearly 17,500 people.

Of those renting, over half (58%) are ‘trapped renters’ who would like to buy but cannot afford to. Only a small number (13%) are renting for lifestyle reasons, saying that it suits them, while 28% would like to buy eventually.

The increased number of tenants hoping to get their first step on the housing ladder could see rental prices staying flat next year, Rightmove predicts. 

Miles Shipside, Rightmove director and housing market analyst, said: “More tenants look set to buy in 2014, but saving a deposit still requires time and commitment, meaning that overall tenant demand is unlikely to change much.

“It could ease a little in 2015, but the reality is that many first-time buyers will still be priced out of buying, especially with increased competition from buy-to-let investors attracted by solid rental returns and the possibility of increasing capital values.

“With there being an increase in supply of property to rent, it’s important that landlords improve the standard of their stock to attract the best tenants as there is more choice of property to rent in some parts of the country. 

“In the past three years rental prices have increased by a total of 7.6%, and the fact it has slowed to 1.4% within the past year is an indication that landlords will have to try harder to get the best returns.

“More landlords and the increase in supply due to buy-to-let mortgage availability is likely to keep rental price growth in check in 2014. 

“However, it could be that we see buoyant rental and sales markets at the same time as a result of the housing shortage of the last ten years, which won’t be solved by a few months of Help to Buy.”

The latest ONS data shows a sharp increase in the number of households in the private rented sector.

Matt Hutchinson, director of SpareRoom.co.uk, said: “The number of households renting has risen from 29% to 34%. While other household spend has stayed the same or increased, for most people rent is their biggest monthly outgoing. The ONS data tallies with our findings that not only are more people renting, but more are returning to shared accommodation, including couples and the over 40s. Flat and house sharing is no longer the preserve of young professionals and students.

“Soaring living costs means it’s a struggle for many renting households just to keep their heads above water, let along have enough spare cash to put aside towards deposits. It’s clear that the aspiration to own our own homes one day is fast becoming out of reach for British households.”