In total two million homes have changed tenure since 2005, with the number of homes transferred from owner-occupiers into the hands of landlords making up half the growth in rented stock in the past decade.
Most of the remaining growth in the private rented sector since 2005 has come from landlords buying new homes, with 700,000 new-build properties being purchased by landlords. The remaining homes changing tenure have come from social housing and residential conversions.
Countrywide’s research found that in the past decade, 1,550,000 previously owner-occupied properties have been acquired by landlords, while 550,000 have moved the other way from the private rented sector into owner occupation – resulting in an extra million homes being occupied by a tenant.
Of those homes that left the private rented sector, 65% were purchased by first-time buyers. Last year 45,000 first-time buyers bought their home from a landlord, the highest number since the market downturn in 2008.
First-time buyers in London and the South East are most likely to buy their home from a landlord, where the UK’s private rented sector is most thriving.
The findings suggested that first-time buyers and landlords were likely to find themselves directly competing for properties, with both parties looking for homes which are smaller and cheaper than the average home. First-time buyers purchasing from the private rented sector paid on average 8% less than those who did not.
Johnny Morris, director of research at Countrywide, said the 4.8% rise in rental costs over the past year has been supported by the imbalance between growing tenant demand and constrained supply of homes to rent.
“The rapid growth of the private rented sector has to come from somewhere, while the tenure may change, the physical home remains. The sector has been growing since 2005 but the number of homeowners has fallen in each of the last 10 years. This scale of shift in tenure shows that the current push from the government to increase the number of homeowners is unlikely to be enough to reverse the decline,” he said.
“Although landlords and first-time buyers might not appear natural bedfellows, because they tend to look for similar types of homes they do end up selling to each other. Many landlords face a choice 10 to 15 years after buying a home, between refurbishing the property or selling it. Those landlords who choose to sell up offer an opportunity to first-time buyers willing to put some work into their first home, often adding to its value.”
