How should investors respond to the UK’s changing property demands?
The traditional ‘buy and hold’ residential housing needs are shifting, and there is now a lean towards developments built for rent and aimed towards a specific demographic, which fits the modern urban lifestyle.
As a result, funding needs are changing to support these types of developments, and investors should look at the reasons behind developing units, which align themselves to the convenience, which a modern urban setting requires.
Increasingly with Urban environments, people choice of accommodation and location is closely aligned to their lifestyle. As such secure transparent access in and out of residential complexes, the need for a 24/7 concierge service on site; facilities to include a gym; cinema room, yoga classes, resident access to coffee machine within the lobby and a turnkey in-house mailing depot which allow resident mail to distributed within mailboxes and a delivery solution to meet online / Amazon deliveries in absence.
Why is this change happening?
Over the last 30 years, home ownership levels have dropped dramatically. In 1991, 67% of 25-34 year olds were homeowners, compared with just 36% in 2014. Meanwhile, private sector renting more than doubled between 1980 and 2014. The decline in homeownership can be blamed on both cyclical and economic factors. Tighter lending standards have reduced the availability of mortgage financing for first-time buyers, and low interest and constrained housing supply helped to maintain the high house price valuations, therefore acting as a further deterrent! The way people live and work is frequently less structured and standardised than it has been in the past, and there appears to be less desire for people to be held down by long-term commitments. The number of self-employed and contract workers has dramatically increased, thus stressing the need for more flexibility and many new leases include break clauses.
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