According to forecasting data, 50.8 per cent of all housing units in the UK will be either privately or socially rented by 2032, a total of 16.3m rented units from a total stock of 33.1m. In a 24-page report, the London-based professional body claimed that, with the government failing to increase UK housing supply, the numbers of people living in rented accommodation will rise to levels not seen for 60 years.
The study said that while population and household growth was rising, the number of new homes available for ownership was not rising anywhere near as fast, and claimed this was “the major cause of first-time buyer frustration”.
According to the report, financial regulations, such as limits on interest-only mortgages, have also served to discourage would-be homeowners. Similarly, low interest rates and quantitative easing has incentivised buy-to-let investors.
Peter Williams, IMLA’s executive director, said: “Growth of the private rented sector has been from a historically low base and has been fuelled by strong underlying demand.
“If current trends continue then demand for private rented property is likely to drive further expansion and increase the burden on our already overstretched housing stock, at a time when first-time buyers are also feeling the pressure of new mortgage market regulations.”
The IMLA report also pointed to an increase in the number of households in the rented sector, from 14 to 18 per cent since 2007, while owner-occupation has dropped from 68 to 64 per cent.
With buy-to-let mortgages financing just 420,000 of newly rented homes since 2007 – which amounts to 32 per cent – the remainder is made up of cash or commercially funded purchases, and properties rented out by their existing owners.
Homeownership is already lowest among younger generations and this effect will gradually move up the age brackets, as more people struggle to buy in their 30s and beyond.
Mr Williams added: “The inescapable conclusion is that we need a proper joined-up strategy to adequately serve owner-occupiers, tenants and landlords, and put an end to key forces pulling in opposite directions.”
David Penny, managing director of the Taunton-based Invest Southwest, said: “At the moment, the pressure seems to indicate a decrease in the viability of securing a mortgage for first-time buyers. So this is prohibiting new entrants to the market.
“This is the consequence of high house prices and the difficulty in securing high enough deposits. When we are clear of the credit crunch era, which won’t be for another five years or so, we would hope that interest rates would have risen to the extent that house prices can be cooled and wages will catch up.”