Millennials that don’t want to own their own home, or those that cannot enter the ownership sector, are primed for a new rental alternative, at a time when mortgage redemption rates in the traditional buy-to-let sector surge.
- Millennials are ready for a new solution in rental accommodation and are helping to drive the growth of the UK’s build-to-rent residential property market
- It comes as new figures suggest that the number of private landlords leaving the UK’s traditional buy-to-let property sector is rising
- Over the next decade, the number of build-to-rent homes will increase from 30,000 to 1.7 million
The ‘millennial nomad’ – those young tenants that either don’t want to or cannot afford their own home – are the driving force behind the current evolution of the UK’s private rented sector.
According to a new report, those aged 22 to 37 are ‘ripe’ for a new type of rental proposition such as build-to-rent.
European law firm Fieldfisher outlines that this demographic makes up 14% of the UK’s population, with increasing numbers turning to the private rental market.
However, it suggests that this demographic, and indeed tenants of all ages, are becoming increasingly frustrated by the insecurity of traditional buy-to-let properties, leading to the growth of the modern build-to-rent sector, particularly in major UK cities.
This comes at time when figures, published by Savills, show that around 120,000 buy-to-let mortgages have been redeemed since the introduction of the additional home stamp duty surcharge in 2016, aimed at professionalising management levels in the rental market.
With this number of redemptions suggesting many private landlords are now leaving the buy-to-let market, it opens the door further for build-to-rent to become the new rental solution many tenants in the UK are now demanding.
There is still some way to go, though. Savills outlines that, out of 5.2 million households in the UK’s rental market, just 30,000 units are build-to-rent.
But this underlines the huge investment potential of the sector. Savills forecasts that, over the next decade, the number of build-to-rent households will increase to 1.7 million, while the value of the build-to-rent market will rise from its current value of £9.6 billion to £543 billion, around one third of the total value of the UK’s private rented sector.