introduction
The UK is facing a significant shortage of affordable housing, and it’s directly affecting the private rental sector (PRS). With an annual shortfall of 128,000 affordable homes, the demand is overflowing into the PRS, which is driving up rents as people seek available housing. According to global real estate advisors Savills, the UK now requires an astounding 187,000 affordable homes annually. However, current construction rates are falling far short of this demand.
Investment opportunities
In 2015, the UK needed 70,000 affordable homes per year. Today, that figure has surged to 187,000, according to recent research. As affordable housing construction lags behind, pressure is mounting in the PRS, creating higher rents due to limited options. With construction starts in the sector down by over a third in the past year, the opportunity for real estate investors to enter this market has never been clearer.
Why Demand is High in Southern England
The UK’s affordable housing crisis is particularly intense in the South of England, where demand for affordable homes is at its peak. Here, an additional 62,600 affordable homes are needed each year. The lack of affordable housing options in this area is shifting even more people to the PRS, allowing rents to increase as demand soars. For UAE investors, this creates a prime opportunity to explore UK real estate investments that align with long-term demand growth.
Savills’ Proposed Solutions for Tackling the Crisis
Savills has recommended several policy changes to address the shortage of affordable homes. These include a long-term rent settlement to enhance the financial capacity of housing providers, along with clear guidance on planning policy. In addition, the report suggests empowering local authorities and regional mayors to make funding decisions that suit their communities’ needs. The UK government is currently consulting on a five-year rent settlement, allowing social housing rents to increase in line with inflation, offering further stability to the market.
A Multifaceted Approach: Building Affordable Homes Across Tenures
Savills’ research stresses the need to build affordable homes across a range of tenures, from social rent to intermediate rent and affordable ownership. By providing diverse housing options, policymakers can better support the varying needs of local communities, helping to reduce pressure on the PRS and ultimately stabilise the rental market.
conclusion
With the UK government planning a new housing strategy for 2025, the focus on building more affordable homes is set to grow. For UAE investors, the demand for affordable housing in the UK provides a compelling case for real estate investment in high-demand areas. By stepping into this growing market, you can make a strategic investment that aligns with the country’s future housing needs.Ready to explore UK real estate investments? Visit our website to learn how your investment can support UK housing demand while providing you with a stable return.
