Housing sector

Value of private rental housing sector jumps 5.8% to £1.4trillion, report says

The value of the private rental sector in Britain rose by 5.8% last year to £1.4trillion, according to a bank report.

House prices soared 9.9% between March this year and the start of the pandemic, helped by the suspension of stamp duties, Shawbrook Bank said.

This included a 5.6% increase in the value of the average rental property across the UK to December 2020, amounting to around £258,900 for each home.

A row of ‘for rent’ real estate agent signs (Yui Mok/PA)

(PA wire)

But despite the rise in value, the size of the private rental sector has shrunk over the past year as some landlords opted out of the market, according to a bank report titled The Changing Face of Buy-to-Let. .

He also found that many tenants had changed, choosing to return to their family home during the pandemic, leave cities in search of more space, or make the most of stamp duty holidays and become them. -same owners.

As restrictions eased, remaining homeowners said demand had increased by 42% in the past 12 months, and two-thirds said they were confident about the future of the property market over the past few months. next 12 months.

Around a third also said they plan to buy another property in the coming year, especially since those not on the housing scale are likely to stay in rental accommodation longer.

The report found that half of renters say they expect to rent for the rest of their lives, with affordability being one of the main reasons.



While more first-time buyers have moved up the homeownership ladder over the past year, the reality is that rising property prices mean more people will continue to be excluded from the homeownership ladder. home ownership

John Eastgate, Shawbrook Bank

Around one in 10 said they preferred the reduced liability of renting, while a further 7% said renting gave them a better place to live than buying.

When asked why they were confident about the future of the housing market, 41% of owners pointed to growth in house prices and an increase in demand from tenants, 33% pointed to the general strength of the economy and 26% increased rental yields currently available. due to low interest rates.

Research by Shawbrook Bank also found that the highest rental yields are in Scotland at 5.8%, the North West at 5.5% and Yorkshire and the Humber at 5.4% .

By comparison, while London may command the highest rents, yields on London rental properties are currently among the lowest at 3.9%, below the UK average of 4.3%.

John Eastgate, Managing Director of Property Finance at Shawbrook Bank, said: “In the context of the pandemic, the private rental sector has once again shown its strength and the important role it plays.

“Landlords are looking to expand their portfolios due to a combination of rising property prices, attractive yields and growing tenant demand.”

He added: “While more first-time buyers have moved up the property ladder over the past year, the reality is that rising property prices mean more will continue to be excluded from home ownership.

“That, coupled with a disruption in employment and lagging wage inflation, will make it difficult for some to buy their own homes.”