Despite two decades of growth, Nationwide has recently reported that the rental market may see potential uncertainty due to COVID-19.
Nationwide's chief economist said: "The outlook is unusually uncertain in the wake of Covid-19," the BBC reports.
Chief economist Robert Gardner stated that the economy will both see uncertainty in the short and long term as the pandemic has likely had “profound effects on the pattern of economic activity and housing demand in the years ahead.”
Private renting has fallen from 19.3% in 2019 to 18.7% in 2020, marking the third consecutive period of negative growth for the industry.
The decrease in renting is likely attributed to the changes in tastes and fashions regarding UK housing.
Areas such as Cornwall, and areas in devon and east Sussex saw rising interest from UK house buyers as more and more individuals are beginning to prefer coastal areas.
The BBC reports that this increased demand for coastal areas has been a direct result of the COVID-19 pandemic as house buyers are looking for homes that have indoor and outdoor attractions such as the beach and coast.
Additionally, the increased confidence around improving broadband within the UK due to infrastructure projects such as Gigabit has also contributed towards increased demand for homes in coastal areas as buyers no longer have to live in dense city centres to experience a good internet connection.
This will likely benefit the UK economy as individuals will benefit from a greater quality of life as more individuals will be capable of working from home in areas which they enjoy such as coasts due to the better broadband connection.
In other words, project Gigabit will improve the geographic mobility of labour within the UK.
However, COVID-19 has not only changed the tastes and fashions of UK house buyers, but it has also affected their financial status too.
During the pandemic, half a million families were behind on rent payments, figures from February 2021 report, therefore, because individuals were unable to pay their rent, private renting has fallen as there is less incentive for landlords to rent out properties if they will not make a sufficient profit from it.
Out of all these families, only 3% managed to negotiate a lower rent as one in 20 private renters in the UK said they had been refused rent reductions thus showing the profit motive which landlords have.
However, some individuals did likely benefit from the COVID-19 Pandemic regarding their financial status as during the pandemic, savings reached a record high.
This means that normal everyday households may have saved enough during the pandemic to place a deposit on a home, therefore, because more and more people can afford homes, the market for rentals has dropped out of fashion.
This is also the likely case as schemes such as “Help to Buy” have increased demand for housing in the UK, hence, because more people now own their own homes, renting has fallen.
Another reason why renting may be on the decline is because of the change in the way in which office firms conduct business.
During the pandemic, many offices opted to use video conference apps such as Zoom to continue operations during the crisis, however, despite the increasing public health and positive economic outlook, some firms are cutting back on office spaces.
These firms will typically rent office spaces out rather than owning them as it is better for cash-flow purposes as well as future planning prospects regarding moving operations.
So, because firms are seeing less and less of a need for office spaces, the rental market will see another further reduction in demand as office spaces are simply not as necessary anymore.
Will this declining trend continue? We don’t know, even the top analysts from Nationwide state there is high uncertainty, it looks like only time will tell.
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Written by Hubert Kucharski
Research compiled by Billy Ryan