Rental Britain: analysis of the UK market

Select Realty Online have released a special report titled Rental Britain (Spring 2017). The 14 page analysis of the UK market asks: “A nation of renters? Examining the opportunities and challenges facing the private rented sector in the UK.”

This article summarises the main findings and you can also download a copy of the full report from our guides section. Read on for the full story to discover why this is excellent news for UK property investment. Peruse our currently available UK property to start boosting your own performing UK portfolio today.

Generation rent

The private rented sector (PRS) is an important sector and a major challenge for the UK’s housing industry. Britons are rapidly returning to renting their homes in a phenomenon that has been dubbed ‘generation rent’. But a fundamental shift is happening which will have an impact beyond a single generation and change the nature of our nation of home owners.

A £840 billion industry
By the end of 2016 the total value of private rented stock in the UK had reached £840 billion, having risen by 42% in just five years; and a number of private rented households had reached an estimated 4.8 million, up from 3.4 million just five years ago. As such private renting now accounts for just under one fifth of the total value of housing stock in the UK.

5.9 million PRS households by 2018
The shift to private renting has accelerated since the credit crunch, thanks to constrained mortgage finance and the significant deposit hurdle for would-be home buyers. By 2018 we estimate that one in five households (or 5.9 million households) in England will be renting in the private rented sector (PRS).

This will require landlords to invest in more than one million rental properties in the next four years, driven by exceptional demand.

The growth in private renting
We estimate that Britons paid a total of £48 billion in rent to private individuals and institutions and forecast this will rise to £70 billion within five years as rents and the rental demand rise further. Tenancies are expected to be for longer periods of time, as renting becomes the norm in society, therefore changing the social and demographic profile of tenants. . The profile of renters will change, with more affluent sections of society being forced or choosing to rent. Increased demand for PRS accommodation will include family housing.

Supply challenges
£200 billion of investment is needed over the next five years to meet demand for private renting. But constrained levels of buy-to-let lending and house building raise issues over the ability to meet this demand. We forecast that only £50 billion will come from buy-to-let mortgages.

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