The huge rise in rental growth means that UK renters are set to pay a record annual rent bill of £63billion in 2022. This astonishing figure shows prospective UK expat and foreign national investors just the kind of profits that are available through a UK investment property.
‘Astonishing Rental Growth’.
‘We’re living in a period of astonishing rental growth’ says Stuart Marshall. ‘While rental growth has slowed slightly over the summer, rents have still risen by 8.8% over the last 12 months (slowing from the annual growth of 11.5% that we saw in May). Predictably London leads the pack in terms of rental growth as it continues to recover from the rental decline that took place over the lockdown. Other areas also performed strongly in rental growth, including the North, Midlands, Scotland and the South West, all of which had year on year rental growth of 8% or more.’
What’s Causing the Rise in Rents?
Much of the massive rise in rents is being driven by the lack of available properties in the market. This means that many people are ‘stuck’ in the rental market as they are unable to find or afford a house of their own. Further, there are fewer properties in the rental market as the inflated house prices mean that many private landlords opted to sell their properties and ‘cash out’ of their investment. These conditions mean that 2022 is set to surpass the peak of rents that was previously seen in 2017. ‘The UK’s annual rental bill has more than doubled since 2008’ says Stuart Marshall ‘showing the increasingly strong investment proposition that UK rental properties present for UK expat and foreign national investors.’
‘Gen Z’s coming of age is also a massive contributor to the massive rents collected in 2022. Gen Z, who are born between 1997 and 2012, have started to leave home and are now responsible for a fifth of all the rent paid in the UK. In fact, Gen Z is predicted to pay almost 12 billion in rent by the end of 2022. Their rental bill is also rising faster than when Millennials were leaving home as it is more difficult for Gen Z to buy their own home than it was for Millennials. This means that Gen Z will likely be paying more rent than Millennials in only the next three years. This shows that the massive profits available to UK expat and foreign national investors are here to stay as more and more of Gen Z both graduate to and stay in the rental market.’
Rental Growth Here to Stay.
‘As we have mentioned, Gen Z’s coming of age is going to contribute to continued rental growth. And there are pervasive changes in mindset that mean many from Gen Z will choose to rent as a lifestyle choice, so that they are able to more easily travel, live and work abroad, and engage in less conventional career paths. However, because of the recent changes in the marketplace, renting is now cheaper than buying. Historically, the biggest barrier to home ownership has been saving a deposit. However, because of the continued increases in the Bank of England’s base rate, mortgage rates have been climbing. This has meant that it is currently cheaper to rent than to pay a mortgage, even despite the huge rises in rental growth that we’ve discussed above. This is having a two-fold impact on the buying power of those looking to graduate from the rental market to home ownership. For one, it is making it even more difficult for prospective buyers to save a deposit, further strengthening this barrier to home ownership for renters. For another, it is increasing renters’ reluctance to buy as concerns over the rising cost of living, inflation, and job security mean that committing to higher monthly outgoings is a risk many are not willing to take. It is all of these factors that mean continued growth is unlikely to go away.’
Still a Great Time for UK Expats and Foreign Nationals to Invest.
The conditions continue to be incredibly fertile for profitable investment for those using a UK expat or foreign national mortgage products. UK expat and foreign national investors have a great range of UK expat and foreign national mortgage products to choose from. They are also experiencing reduced competition from domestic buyers, increased choice and a slower market as people rush to sell and demand for property begins to slow. With the change in mindset amongst younger renters and the conditions that will contribute to long-term renting far into the future here to stay, there are so many reasons to invest in UK property using a UK expat or foreign national mortgage product. These products facilitate the incredibly lucrative purchase of a UK investment property which will pay dividends both through the current high monthly rental income and in the long-term growth of value in the property. Speaking to an expert UK expat or foreign national mortgage broker can help UK expat and foreign nationals decide the best way to invest.’
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