Changes in Tenant Demographic
Today I'd like to bring to your attention how the demographics of tenants are changing, and how they will affect how you plan your business in the future. Because as the public sector grows for rents, so does their influence on the government and their policies. So their votes become attractive to any party, hence why legislation is always changing.
But let's have a look at some of the numbers.
35-49 year olds now are the biggest segment of renters, they've overtaken the 25-34 year olds. And it's because properties are getting too expensive for them where they want to live, so they have to rent.
Now that causes other problems.
In London, because it is so expensive, you've got the Mayor of London, Sadiq Khan, now looking at rent control and how to reduce rates over a period. He's been looking at the models done in Berlin, where they froze rent for five years from 2020. And Paris was reintroduced after two years, rent controls.
These will all have impacts on your business. The impact will be where you choose to rent your property out.
So if you're in London, expect changes. Changes you may not welcome. But if you plan ahead, have factored these things into your business, then you should be alright.
Over-50s are also emerging as a fast expanding group of tenants. Their kids have all left home, the big house is not where they want to be anymore, so they sell it and go and live somewhere else. In a lot of cases that maybe by the coast or even moving nearer to their children, so they will rent and release the equity in their property.
Now they're accounting for about 15% of all rent at the moment, but that can increase as we all live longer and our pensions may not support us. So really selling the family home, releasing the equity and renting may be a more attractive way of doing it.
They're predicting, not me I'm not that good, but the big brains are predicting that a third of all over-60s will be living in private rented accommodation.
How will letting agents prepare themselves for this?
When you look at your property, does it fit the age group you are looking at?
You may be lucky to have inherited your family home, but is the decor and the furniture, the style of it, attractive to your new demographic/age group that you're looking at?
This is what you have to decide, and when you do it and how well you're going to do it.
A student may put up with less glamorous, but somebody who's 35 onwards are probably going to be looking for something really really nice and special, because they're going to have friends who are going to be invited around, so they want to be proud of that property.
You need to make sure that you know your demographic and what sort of taste they have and make the property appropriate for them. And you should be able to go forward, with a good financial return.
David Muir
Connect Properties Limited
07776117774