Our latest video outlines how shifting generational attitudes towards ownership are driving a revolution in Britain’s private rented sector.
What’s happening with the UK property market?
Homeownership levels have fallen to a 30-year low, while the demand for rental accommodation has risen by 17,500 each month for the last decade.
Of course, the rising cost of ownership is preventing many from making it onto the ladder. But changing generational attitudes to ownership now mean that many young workers actively decide to rent in order to pursue long-term life goals.
But current rental product was not designed for these new ideas, this new tenant.
This is Generation Y — and it wants a new home.
The property market in the UK is changing. It’s a fundamental shift already happening beneath our feet. And property investors need to catch up.
Britain is no longer a nation of homeowners. 20 million people now live in rented accommodation. And more are making the shift every day.
Homeownership rates peaked at 73% in 2001, led by an older generation who saw homeownership as a true symbol of success. But that’s now an outdated ideology, and ownership rates have dropped to just over 63%, the lowest in almost 30 years.
Currently 5.4 million households are renting, but by 2025, this will explode to reach to 7.2 million households.
This change is most noticeable amongst young people. Over the past decade, there’s been a 25% fall in the number of 25 to 34-year-olds buying property.
So who are these people that are changing the face of UK property?
This is Generation Y, the so-called ‘millennial’ generation that’s changing more than just the property world.
This is the generation that downloads music on Spotify, streams movies on Netflix and pays to use the latest BMW on a ‘per-minute’ basis.
They live in a subscription-based economy, only paying for something as long as they need it. For them, renting is not a stop-gap along the way to homeownership, it’s a preference. The lifestyle choice of an emergent generation that equates new experiences with success, not ownership.
But while their outlook and lifestyle is modern and vibrant, rental accommodation is increasingly looking old and lifeless: unchanged during the emergence of this modern generation of renters.
Buy-to-let was the necessary solution to early demand for rental property; repurposing homes that were originally designed for owner occupiers of a previous generation.
From doorstep to rooftop, nothing evolved. Tenant’s needs were never considered. If renting was perceived as a short-term necessity, why would the approach ever need changing?
Generation Y has necessitated this change, a generation that’s too large and too loud to ignore.
“Nobody is on-site in my apartment building.”
“I always have problems with rental agents and management companies.”
“I want to have my space, to feel like it’s my home.”
“Security of rental accommodation often isn’t good.”
“I share a house that’s been designed for a family with two kids.”
“I just wish I was closer to the centre of town.”
This generational shift presents an investment opportunity unlike anything the market has ever seen before. An opportunity to create something brand new for what will become the UK’s largest ever rental population.
For an ever-demanding and expanding market, supply is currently severely restricted. There’s very little product available that truly understands and matches these new demands.
Generation Y wants a place to call home. Generation Y needs Affinity Living.
Purpose-built by Select Property Group to sync with modern life, it’s a brand that delivers properties in city centre locations, close to work and transport hubs, with technology on tap and a sense of ownership amongst a community of a shared mind set. All created by experts who’ve listened to Generation Y and know what they need and aspire towards.
The spec list is compelling – a fully equipped gym, private dining room, cinemas, live/work lounges. But unlike most other apartment developments, these things are not a box-ticking exercise. Every square inch of design and every second of ongoing service cultivates and nurtures stronger relationships. And that sense of community encourages people to put down roots.
This ‘affinity’ to a place is what provides the stability of the investment. The Generation Y tenants choose to stay there, living for longer than average, renewing their tenancies and paying rental premiums they believe are worth every penny. This results in higher yields and a stronger long-term investment.
This is the start of build-to-rent, and the scale of growth already speaks for itself.
Affinity Living will lead the market in this new era.