Almost a quarter (24 per cent) of households will be part of the private rented sector (PRS) by the end of the current parliament in 2020. The latest Rent Check report, produced by BDRC Continental and Allsop LLP, outlines what is believed to lie in store for the property market over the next five years.
Allison Thompson, lettings director at property specialist Leaders, highlights the key findings: “There has been a 13.9 per cent increase in the proportion of houses within the PRS over the last two years and rents are increasing. In the south-east specifically there has been a 10.07 per cent rise in rents over the same period.
“On top of this, it is expected that more than 1.3 million new households will be added to the UK’s property stock, of which one million will need to be provided by the PRS. London and the south-east are likely to see the greatest increases in terms of the proportion of homes within the PRS between now and 2020, as rising tenant demand drives the addition of new rented homes to the market.”
The report reveals that a steep increases in house prices has led to a slight decline in rental yields for landlords, however the prospect of further capital appreciation is keeping investors keen. 14 per cent of those surveyed by the Rent Check said they had expanded their portfolios in the last three months and 26 per cent confirmed plans to do so over the coming six months.
Across the country as a whole, expansion of the PRS is described as “inevitable” by the report. What’s more, the PRS is also predicted to become more important than ever by the time the country goes to the polls again in 2020.
The Conservatives have outlined their commitment to home ownership and schemes to increase this are in place. But in some areas, rents and capital values will rise more quickly than people are able to save, meaning owning a property will remain out of the reach of a “large and growing section of society”.
“With tenant demand likely to remain high, rents on the rise and the PRS forecast to grow, we are seeing optimism among landlords and would-be investors,” says Ms Thompson. “Now is an excellent time to purchase an investment property or to expand an existing portfolio. Provided you do your homework on exactly where and what to buy to meet your investment goals, buy-to-let can offer great returns, both in terms of a regular monthly income and capital gains over the medium to long term.
“The best place to start is by consulting an independent property expert like Leaders who can offer valuable insight into your local rental market and how to make your investment as successful as possible.”