Private rental market worth £1.3trn in current market conditions
The latest research by nationwide buy-to-let specialist, Sequre Property Investment, has found that there is some £1.3trn worth of housing stock within the private rental sector.
Sequre’s analysis of stock rented either privately or via a job or a business found that despite declining from a high of 4,832,000 in 2016, there are still some 4,799,000 privately rented properties across England. This is the second-highest level on record despite a string of government attempts to dampen the financial return on offer to landlords within the sector.
At the same time, house prices across England have climbed 8.9% meaning that not only are there more rental properties, but landlords have enjoyed a strong rate of capital appreciation.
London is home to over a million private rented properties accounting for 22% of all private rental stock in England. With the capital also home to the highest average house price, it means the London rental market is worth a staggering £512bn alone.
The south east is home to 14% of all private rental stock and the second most valuable rental market at £229bn.
Despite only accounting for 10% of private rental dwellings in England, the east of England is home to the third most valuable rental market at £156bn.
Although both the south west (11%) and north west (12%) are home to a slightly larger proportion of private rental market stock, marginally lower property prices mean they trail the East of England slightly in terms of total rental market value at £142bn and £102bn respectively.
The north east accounts for just 4% of all rental market stock, the lowest of all English regions. But despite this, the region is still home to a private rental market made up of £29bn worth of bricks and mortar.
Sales director at Sequre Property Investment, Daniel Jackson, commented: “The private rental sector has grown considerably in recent times, both in terms of the level of stock available, but also where the value of this stock within the wider housing market is concerned.
Not only does this demonstrate the continued strength of the sector, but it also highlights its importance as the backbone of the private rental market. Without it, the government would be left with a shortfall of nearly five million homes and given their consistent failures in addressing the current housing crisis, this would no doubt be yet another obstacle they would fail to overcome.
Fingers crossed they’ve now realised the importance of the rental market given the fact a widely expected increase in capital gains tax failed to materialise during the last budget. While a buy-to-let investment will predominantly focus on the yields available, the capital appreciation of a rental market investment is an additional benefit that many landlords can reap on exit. Had the government decided to penalise this, a mass exodus of landlords would no doubt have followed.
Of course, while the overall value of the rental market is higher in the south, the north can present some very good investment opportunities. Those looking to these more affordable regions can realise yields in excess of 8% in the right areas, which gives them more scope for building cash flow and as well as seeing capital growth.”
|Location||Private rental stock||Proportion of the private rental market||Current average property value||Total estimated value|
|East of England||497,000||10%||£313,964||£156,040,267,090|
|West Midlands region||451,000||9%||£216,973||£97,854,677,282|
|Yorkshire and the Humber||482,000||10%||£179,408||£86,474,652,915|
|Sources||Gov.uk – Live tables on dwellings||Gov.uk – UK House Price Index|