Trapped renters, tenants who would like, but cannot afford to, buy, make up 55% of the rental sector, with one in four of them over the age of 40, according to the portal’s latest Consumer Rental Forecast. Thus, this group faces the prospect of having to choose between a heavily reduced mortgage term or continuing to pay off a mortgage into their 70s and beyond.
Miles Shipside, director of Rightmove, says: “Over half of those in rented accommodation would like to buy now, but can’t make the sums add up and, as a result, are trapped. The global economic woes that have left first-time buyer numbers at record lows will shatter the goals and aspirations of many as they face the reality of renting for far longer than they originally planned. “Trapped renters over the age of 40 could face the prospect of being an OAP mortgagee, or face difficulty getting a 25-year mortgage term if it takes them beyond lenders’ retirement age criteria.”
Rightmove’s survey also shows the growing gap between demand and supply. Demand continues to set records, whilst available stock is down 5%on the last quarter as the supply of new rental properties remains muted and tenants stay in properties for longer. The lack of supply means renters are resigned to pay more, with 53% of them expecting rents to rise in the next 12 months and 39% can see themselves still renting in three years’ time.
This is good news for investors. The combination of high tenant demand and upward rental pressure will be particularly appealing to long-term investors. The survey reveals that 41% of investors claim that attractive yields from rental returns, compared to their other investments, are their main reason for investing in property, up from 24% in Q1 of this year.
Shipside adds: “Currently, the stock market offers the certainty of a stressful rollercoaster ride and safe cash investments deliver the certainty of below inflation returns. Understandably, the solidity of bricks and mortar combined with high tenant demand and rising rents has growing appeal as a physical asset that could prove to be a better hedge against inflation.”
David Sansome, Managing Director of Sansome & George said: “This survey highlights the difficulties for many in being able to obtain a mortgage and purchase a property. It would also indicate a potential issue for the private rented sector if high loan to value mortgage lending suddenly became freely available and there was an exodus of tenants.
The reality is that the market is adjusting to a new order of things and I expect this to continue for some time.”
