Not only has the demand for room rentals increased over the last few years it may only increase further says Matt Hutchinson of spareroom.co.uk.
Speaking at the London Property Investors Network meeting last night at the Crowne Plaza, Blackfriars, Matt said that the pressures of fewer available homes, stubborn prices and student debt has resulted in more and more people looking to rent rather than buy. And driven by necessity, many of these aim to rent a room rather than a whole property. This is a profound shift in the UK housing market and something we should get to understand.
There are now fewer first time buyers he went on to say, rents are going up and there is an increasing competition for any rooms that are available. Lodger ads are also up 52% in two years he added. Their site has seen an increase of 82% in traffic over the same two years and now attracts one million unique visitors a month as the UK’s number one flatshare site.
But forget visions of ‘Rising Damp Rigsbys’ Matt said. This is now more like the cast of ‘Friends’ as the modern room renter is looking for quality. Today’s flatsharer is more likely to be a young professional in their early thirties who will pay a little extra for a good room and older sharers are on the increase. This means that there is a growing market for good quality house shares that can be sold at a premium, especially in London.
Room renting gives the tenant affordable flexibility Matt explained, putting them in a better position to maybe save for that all important deposit, something they would probably be unable to do if they rented out a whole apartment.
A recent survey by spareroom.co.uk showed that 19% of renters saw themselves buying in more than ten years time, 19% said they would never be able to buy but 48% said that they would be happy to rent long term, which is surprising given the UK’s well known love for home-owner occupancy.
Although there is an added hassle to renting out a house by the room, which is something that the traditional rental agent would steer clear of, there are pros for the landlord.
Because the room tenancies are staggered there are likely to be fewer voids. It also allows for continual maintenance rather than shutting the property down for a couple of weeks to redecorate.
The yield from renting out by the room can be much higher, 8-12% as compared to the Rightmove UK average of 5.8%.
A recent report for the housing charity Shelter by FTI Consulting, “Understanding supply constraints in the housing market”, suggests that, without real long term government support for housing, the UK will never have the capacity to supply enough homes. It therefore looks like room renting will continue to rise in the foreseeable future.
This will give aspiring and entrepreneurial landlords who offer well kept accommodation many opportunities. But be aware that there may be strict rules regarding the renting out of multiple rooms in the same house. So make sure you know how these work in your local area before you dive in.