Analysis & Growth Forecast for the Private Rental Sector 2018 | Investors Forum YorkInvestors Forum York

Hidden figures

With a host of policy changes affecting the rental sector and a marked slowing in the number of properties being purchased by landlords, we’re all wondering what this means for the outlook of the private rental sector. Since the introduction of the 3% stamp duty land tax (SDLT) charge in April 2016, landlords have sold 50,000 more homes than they’ve bought. Investors only made up 12.3% of purchases in 2017, compared to 16.4% in 2015. Landlords seem to be thinking twice before adding to their portfolio or replacing homes they’ve sold.

Despite landlords selling more homes than they bought, the private rented sector in England continued to grow in the 12 months after the introduction of the higher stamp duty charge. Between April 2016 and 2017 the number of households renting increased by 164,000, 3% more than 2016. And it is forecast that the sector will continue growing in 2018, and over the next five years. By 2022, 20.5% of households will be renting in Great Britain, up from 19.4% today. By 2025 the sector will reach six million households.

Greater forces at play

With greater forces at play, demographic shifts are driving the rental sector to a degree. That coupled with there being several routes homes can take to be put on the rental market, explains in part how the sector is forecast to continue to expand healthily despite more rental homes being sold than bought since 2016. A firm anchoring has been put in place by the large amount of wealth that is tied up in housing, with 1.3 million more households owning their homes outright rather than through the help of a mortgage.

For a full summary of how all of these market trends are combining to drive the sector forwards and a breakdown of the analysis and forecasts for the year ahead, please click below: