No Stopping the Private Rented Sector
31st October 2018
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Nothing it seems can stand in the way of the continued growth of the private rented sector.

New policies introduced by the Government over the past two years have had an impact as landlords are buying fewer properties and arranging fewer mortgages. Since the start of the 3% Stamp Duty Land Tax (SDLT) surcharge in April 2016, landlords have sold 50,000 more homes than they bought. Landlords have also bought fewer new properties, just 12.3% of new homes in 2017, down from 16.4% in 2015.

However, these figures fail to tell the whole story as the underlying picture is that the private rented sector has still continued to grow. Between April 2016 and 2017 the number of households renting rose by 164,000, which is 3% more than in 2016.

Experts are forecasting that the private rented sector will reach six million households by 2025. By 2022, 20.5% of households will be renting in Britain, up from 19.4% today. With house prices continuing to rise faster than incomes, the steady decline in home ownership looks set to continue meaning demand for rented accommodation will grow, causing rents to rise.

According to the latest Landbay Rental Index, rents in August experienced their greatest monthly increase for 28 months. On average, rental values increased by an average of 0.13% – the biggest month-on-month rise since April 2016.

The increase drives the average rent paid for a property in the UK up to £1,209 per month, dropping to £767 if London is excluded. Rents across the UK increased by an average of 0.97% – the highest level seen since May 2017.

John Goodall, the CEO and Co-Founder of Landbay, said: “The Government must start to see landlords as a vital part of the UK housing market, rather than an easy target for raising the coffers. Any further changes to regulation or taxation will only end up on the tenant’s door.”

The slowdown in the property market caused by the rise in stamp duty has also helped the private rented sector. It has been estimated that 80,000 homeowners who tried to sell their home in 2017 decided to hold on to their property and rent it out instead.

Then you need to factor in the 200,000 homes which change ownership through inheritance every year. Some of these homes are sold, but research from UK Finance shows that around 16% of landlords acquired their property without a purchase, which includes inheritance.

A further sign that property is still popular for investors is the fact that approximately 50% of the UK’s total wealth is tied up in land and property, according to The Office of National Statistics (ONS). Around 65% of investor purchases were made with cash in 2017, that’s £21 billion worth of property.

The huge amount of money tied up in property is protecting the rental market from the recent policy changes. This situation creates a steady base for the private rented sector to continue to grow, particularly as the demand from tenants seems set to rise further.

If you are thinking of investing in a buy-to-let property, call Knight Property Management today on 01992 308181.

About the Author

Victoria H

Member since: 11th March 2014

My name is Victoria Hunter and I'm a true Hertford person - I went to school in Hertford and grew up here. I understand the importance of bringing trusted businesses and the community together, and believe...

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