There is no doubt about it, would-be first-time buyers in East Dulwich face a very steep mountain to climb when it comes to securing their own home. Properties are becoming increasingly unaffordable, and new homes are virtually non-existent. One of the reasons for the lack of new homes is the price of land. Property developers and large home building companies such as Berkley Homes or Barratts are willing to pay a high price for land. Even social housing providers and local authorities are struggling to compete.
Since the introduction of buy-to-let mortgages and a new breed of East Dulwich landlord, the private rented sector has offered increasingly high-quality accommodation for young people priced out of the property market. The rented sector today is a far cry from the conditions of the 1960’s and 70’s, where rack-rent landlords charged sky-high rents for properties with WW2 wallpaper, no central heating and draughty windows.
Until recently, I had no concrete evidence to back up my own personal and long-held belief that the type and demographic of tenants in East Dulwich has improved over the past 20 years. According to some statistics recently released by Durham University, of the 58,874 residents living in a private rented property in the Southwark Council area, 36.75% (or 21,637) of these are classified in the AB category (being Higher and intermediate managerial / administrative / professional occupations). This can be compared to 43.21% owner occupiers who own their property without a mortgage, or 8.14% who rent their property from the local authority. Fascinating don’t you think?
Looking at the C1’s (being the Supervisory, clerical and junior managerial / administrative / professional occupations), of the already mentioned 58,874 tenants in the area, an impressive 21,604 of them are considered to be in the C1 category (or 36.70%). Again, when compared with the owner occupiers who own their property without a mortgage, that figure stands at 31.75% and 28.02% who rent their property from the local authority. So, if we use the conventional measurements recorded by the white-collar “ABC1” i.e. middle class ….
This means 73.5% of tenants are considered middle-class in East Dulwich.
Not wishing to bore you with too many numbers, the fact is that private tenants are moving up the social ladder. During the 1960’s and 70’s, the private rented sector in East Dulwich and the rest of the UK was seen as a temporary solution for twenty-somethings, before they bought a property. In 2016, renting is viewed from a very different perspective and holds a different place in society. The increase in renting in East Dulwich, which I have talked about many times in the East Dulwich Property Market Blog, may be a reflection of the increasing difficulties faced by this group in accessing other housing options. It may also be a reflection that people nowadays choose to rent long term instead?
So what does all this mean for landlords? One thing is for certain, East Dulwich Landlords need to understand that tenants now demand more from the home that they rent. They also demand more from their lettings agent and their landlord. While first-time buyers struggle to get on to the property ladder and mortgage lenders and the government impose tighter controls on lending, it is likely that potential first-time buyers will remain in the private rented sector for longer. One thing’s for sure, renters will still only pay ‘top dollar’ rent for a ‘top dollar’ property.