The rental market is growing as people are given a wider range of options, delegates heard at Real Asset Media’s Towards Affordable Cities briefing, which took place online recently.
“Generation Rent is here to stay,” said Adina David, director of urban living, Greystar. “There is a lot of choice now and more to come in the rental sector, different types catering for different needs and allowing for the flexibility people want.”
The big change has been the entry of institutions and the growth of the professional build to rent (BTR) sector.
“There’s additional value and perks in renting from professional institutions,” said David. “It allows instant access to things, makes it easy to move in, to plug into the community and to get to know your neighbours.”
According to Greystar research, in the UK the rented sector will grow by 500,000 units in the next three years, while in Continental Europe the rental market will overtake acquisition by 2024.
Landlord quality was rented market’s biggest issue
“Young people are very comfortable with the idea of renting,” said John Harcourt, managing director, Kajima Properties. “The biggest issue with renting has been the quality of the landlord, but now institutions can provide security and certainty.”
Renting also contributes to the constant renewal of cities.
“When people buy a home the financial cost and emotional capital invested is such that they tend to stay, while renting allows communities to regenerate and change, which is a fantastic thing for cities,” said Harcourt.
It is good for cities to attract different types of people and in order to do that there must be different types of housing on offer.
“You need a wide range of products and rental plays a key part in this,” said Anette Simpson, director of development and partnerships, Legal & General Affordable Homes.
In many UK cities, including Edinburgh, the rental market is still mostly in private hands.
“BTR is a helpful addition to the market because it speaks to a more modern way of living,” said Adam McVey, councillor, council leader, City of Edinburgh. “But it doesn’t deal with the life cycle or address the need for family properties.”
The problem is that incomes do not keep pace with the rate of increase in the rental market, he said, while ideally people should be able to afford to rent when they are in their 20s, and also later when they have a family.
“Inflation in the market is an issue that can only be solved by having more homes to rent,” said McVey. “The only solution to the problem is to get the housing supply right.”