New research suggests that the ongoing cost-of-living crisis has discouraged a generation of renters from home ownership. As landlords, how can you support this growing group of tenants?
According to new research from Zoopla, the cost-of-living crisis has seen a new group of renters emerge, termed by some outlets as ‘Guppies’ – young professionals who have ‘Given Up on Property’.
The group is made up of renters under 40 who feel that the current economic situation means they will never step foot onto the property ladder.
Zoopla’s research found that 42% of adults aged 18-39 who don’t own a home say they’ve given up on the idea of buying one in the next ten years. Furthermore, just 21% say they will “definitely” be able to afford a home in the next decade. Those who have given up on being able to afford a home in the next ten years cite these three main reasons:
- The cost-of-living crisis (64%)
- Increasing house prices (51%)
- Higher mortgage rates (49%)
Alan Davison, a Director at finance firm Together, commented that “The cost-of-living crisis, paired with continually high inflation and interest rates have left many despondent about their financial situation, and now these findings suggest many fear they will never be able to buy their own home”
“Our own residential research found that one in five respondents have never intended to apply for a mortgage and 17 per cent stated that affordability of monthly payments was a key roadblock to homeownership”.
How does this benefit buy to let landlords?
As a landlord, rising interest rates, increased legislation, and ongoing tax changes make it increasingly challenging to maintain profits in the buy to let sector. However, as Zoopla’s findings show, the constant and rising tenant demand continues to offer ample opportunities to those who can afford to stay in the market.
Reduced void periods and increased tenant demand
With a generation of renters expected to remain in rented accommodation for longer, this demand will only grow as more young professionals enter the market. You’ll find it easier to rent new properties, and it’ll take less time to replace tenants who are moving out. Ultimately, this keeps your cashflow and profits more stable.
Increased rents
If more people need good quality rental properties for longer, competition to secure those properties will increase. It’s no secret that there’s a huge mismatch between demand for rented housing and supply, and that gap is only widening. This discrepancy will, at worst, maintain rent rates. More likely, rents will continue to increase, which will increase your profits now that mortgage interest rates have settled.
New buy to let investment opportunities
For landlords looking to maximise this investment opportunity, it’s worth considering the Government’s new investment zones. These five areas are set to receive significant funding for housing and infrastructure projects, attracting many people to move to the cities.