Households who rent their home privately make the most efficient use of housing stock in comparison to any other tenure, according to figures compiled by Countrywide plc, the UK’s largest estate and letting agent.
Tenants in the UK are less than half as likely to have a spare room in comparison to homeowners. If all of the 135,000 new homes that were built in the UK during the last 12 months went into the private rented sector, they could be expected to house 281,000 people based on how UK tenants presently live. By way of comparison, if every new home went to an owner occupier, just 241,000 people would be housed, 40,000 less.
Private renters generally make the most efficient use of housing for two main reasons. Firstly, by virtue of paying rent, there is a significant disincentive not to pay for empty rooms. This incentive is much weaker for households which own their own home or live in social housing.
Secondly, the barriers to moving are much lower for tenants. With no stamp duty, legal costs or waiting lists, the flexibility of the private rented sector is one of its largest attractions. As a result, those renting tend to move much more often. Private tenants account for 60% of households that move each year but just 18% of the population. As a result, households that rent privately who find what they need from their home has changed, are much quicker to move.
Large cities and London in particular tend to be where privately rented households make much more efficient use of space than their homeowner counterparts. With flat or even room sharing common among the young private tenants, they are less than half as likely as homeowners to have a spare room. However, outside of major cities the differences between households who own or rent are less marked.
Commenting Nick Dunning, Group Commercial Director, Countrywide plc said:
“While increasing the amount of new homes built is primarily a numbers game, how efficiently these homes are used is also an important factor. The low barriers to move to a more suitable home mean that private tenants have proved themselves to be the most efficient users of space. Conversely, for both owner occupiers and social tenants, the barriers to moving home when it no longer meets their needs are much higher. As a result they generally use housing much less efficiently.
“Both investors and owner occupiers play an important role in ensuring that new homes get built. While investors are willing to purchase units off plan often years prior to completion and provide crucial forward funding, owner occupiers are more willing to pay a premium for a product they themselves will live. The most successful schemes cater for both markets, balancing affordability with viability.”