Buy-to-let is set to surge over the next seven years
Major new research into the private rental sector predicts there will be six million households renting by 2025, a significant increase on the current figure.
Estate agents Hamptons International says the buy-to-let sector is destined to grow considerably over the next seven years, despite recent anti-landlord legislation.
The agency said: “Between April 2016 and 2017 the number of households renting increased by 164,000, 3 per cent more than 2016.
“We forecast that the sector will continue growing in 2018, and over the next five years.
“By 2022, 20.5 per cent of households will be renting in Great Britain, up from 19.4 per cent today.
“By 2025 the sector will reach six million households – – around 22 per cent of the total.”
Cash purchases are becoming increasingly important in the sector, the agency notes, insulating it from regulatory and tax changes.
Around 65 per cent of investor purchases were made with cash in 2017 adding up to £21 billion worth of property.
The agency admits that strong house price growth has shrunk yields for new buyers, especially in the south of England, but maintains that ‘buying wisely’ brings benefits.
Hamptons also says that on average, landlords selling in 2017 made a total gross return of 69 per cent over 8.5 years – with 60 per cent from rental income and 40 per cent from capital appreciation.
The report also notes that lower house prices and weaker expectations of price growth in the South are making the North more attractive for landlords.
In addition, it says the build-to-rent market is growing quickly in the UK as interest from investors and tenants grows.
Homes within these schemes attract a rental premium of up to 25 per cent above an existing flat in the private rented sector, or 11 per cent above a new build flat.