Long-term renters are dominating the UK rental market as the sector has recently swelled to such an extent that the UK is now currently fourth world position in terms of rental market size.
A study by Octane Capital has found that the UK is only behind the USA, Germany and Japan in terms of properties that are privately rented.
Octane have based these estimations on their research showing that there are 29.5 million homes in the UK. Their research included looking at number of dwellings, and then proportioned these to privately rented and then equated these to the total number of rental homes.
Germany, Japan and the US are ahead of the UK in terms of massive rental markets but this seems to be in line with those countries’ trends where it is quite usual to rent into old-age rather than live in your own home as is aspired to in the UK.
Octane says that out of the 139.7m dwellings in the US, 47 m of these are rental properties. Germany has around 20m rental properties with Japan following at 8.7m.
Chief Executive at Octane Capital, Jonathan Samuels, pointed out the Buy-To-Let sector in the UK could see an increase in the number long-term renters as a shift occurs in people’s attitude to renting and changing lifestyles.
“We could see the UK start to catch the other frontrunners as long-term renting becomes more prevalent as a lifestyle choice,” he says.
“This is already a commonplace occurrence in nations such as Germany where nearly half of all homes are privately rented in order to satisfy this demand. Should we see a similar trend emerge in the UK, there’s no doubt that the buy to let sector will continue to swell in size.”
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The surge in house prices has put home ownership out of reach for many renters in the UK. With a third of UK properties now being privately rented, and the rise in the cost of living and looming mortgage increases, it is even harder for anyone wishing to buy a property.
Octane has stated that they believe the current BTL market is worth around £1.7trillion, based on current supply. This figure follows an increase of £239bn over the last five years.
As the market value is bases on property prices, it comes as no shock that London holds the most value in rental homes, being worth around £500bn. London accounts for around 9% of all rented properties in England.
Samuels believes that the sector has faced some difficulties in recent years, with the government trying to “dampen investment” by reducing tax relief, increasing stamp duty and changing tenant fee rules. Covid, he adds, has also affected some landlords with longer void periods.
But he adds: “Despite all of this, the sector has stood tall and continues to provide the vital rental market backbone that so many are reliant on.
“At the same time, the nation’s landlords have benefited from a considerable level of capital appreciation on their buy-to-let investment and the value of the sector as a whole has increased substantially.
“Let’s just hope that whisperings of a higher rate of capital gains tax remain just that, as any further increase could spur a reduction in available stock, causing the total value of the market to decline in the process.”