An landlord of mine from Australia, who is always keen to buy more buy to let properties, emailed me last week to say that he was concerned that he had missed the boat by not buying a property before now.
My immediate response was to repeat my often said mantra of ‘the demand for rental properties over the next 20 year + will be very strong’ so the future for renting is strong.
However, it got me thinking that it would be good if I could back up this mantra with figures to provide more comfort. So I have done this.
There are currently 225,088 properties in Edinburgh. The Annual Edinburgh Housing Land Audit shows that 9,573 properties are due to be built by 2021 meaning that by 2021 there will be 235,661 properties in Edinburgh.
59.0% of properties in Edinburgh are currently owned, 17.2% are Council/social rented, 1.1% are rent free and the remaining 22.7% are private rented.
We know that home ownership is coming down and we know that there are not that many Council/social properties being built. According to Sheffield University, buy to let landlords will continue fuelling the growth of the private rented sector in the coming decades. By their estimates (and they are considered a centre of excellence on the topic), the rate of homeownership nationally will fall to 50% (today it is 59.0% in Edinburgh) by 2032, while the rate of private sector renting will increase to 35% (interestingly, in Edinburgh it stands at 22.7% today).
I estimate that by 2021 home ownership will fall to 50%, Council/social rented and rent free will remain the same at 17.2% and 1.1% respectively which would mean that private rented would increase to 31.7%.
This would mean that by 2021 there would be 74,387 private rented properties which is a 39.6% increase from the current level of 53,268.
Therefore, whilst there may be a few challenges on the buy to let market at the moment, the medium to longer term outlook for the rental property market is good. My overseas landlord was comforted by this, so much so in fact that tomorrow I am viewing the buy to let property in Blandfield, Broughton, Edinburgh that I introduced to him last week!
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