As an owner myself, would I have any scruples about buying a bungalow to rent? Well, I’ll let you in on a little secret, I’m currently renting a bungalow to a family. Now, in all honesty, a bungalow probably wouldn’t have immediately emerged as the property type of choice when adding to my portfolio. However, since I knew it would suit their needs perfectly, it became a sensible option. Also, the sums added up and it was in the right place.
But why am I focusing on the bungalows, I hear you cry? Well, if recent research by Paragon Bank is to be believed, nearly one in 10 homes rented in the UK could be a bungalow over the next 10 years.
A survey of over 1,300 tenants in the private rental sector (PRS) showed that while 3% of people currently live in a bungalow, 9% of respondents plan to rent this type of property within 10 to 15 years. Further analysis conducted on behalf of Paragon Bank by the Social Market Foundation found that households headed by someone over the age of 55 will make up more than a quarter of all private tenant households by 2035.
The Government’s English Housing Survey shows that there are currently 141,000 PRS bungalows in England, representing 3.3% of the total rental accommodation. Rental loan figures have shown strong growth in the number of bungalows purchased by owners over the past five years, although these are still low as a proportion of total properties purchased. Last year, owners bought 3,370 bungalows with a rental mortgage, compared to 1,844 in 2017.
It’s no secret that people are living longer or that bungalows are often associated with aging generations, and there’s no denying that they offer more practical living space for those who may not be as mobile. than before.
The profile of tenants is also aging. Some elements of the older generation who have made substantial gains on their properties due to rising house prices are cashing in and moving into rental accommodation to bolster retirement pots or help family members access or to climb the ladder of ownership. Other reasons could be to downsize, be closer to family without having to go through the home buying process, or simply to reduce maintenance and responsibilities around their home.
From a landlord’s point of view, and I’m speaking very generally here, bungalows can come with larger plots which could provide greater flexibility with regard to future development opportunities for landlords or respond to a more pressing issue of responding to their tenants’ demands for more outdoor space. in the here and now.
What I’m trying to say is that as market dynamics and tenant profiles/requirements continue to evolve, so do landlord approaches to their portfolios . Especially if, like me, they have the perfect tenant in mind or are simply ahead of these changing dynamics – don’t worry, my tongue is stuck firmly in my cheek on that last point.
The serious point here though is that with many homeowners benefiting from rising house prices over the past few years, it is important to think carefully about if, how and where they are reinvesting. Operating a portfolio approach of single bungalows may not be the way to go, but having a balanced portfolio incorporating different types of properties could definitely pay dividends from a risk perspective and generate strong returns over time. .
Cat Armstrong is Mortgage Club Director at Dynamo for Intermediaries