17^th Dec 2017

As predicted by many in the private rented sector, the government's 'poisoned chalice' of tax reforms as well as the Prudential Regulation Authority's tightening up of buy-to-let lending, is slowing down the growth of the sector in spite of its value being the highest ever.
According to a lender's Buy - to Let Britain report the private rented sector value has grown by 6.4%, the equivalent of nearly £82.6 billion in the last twelve months; the apparent worth of the sector is nearly £1.4 trillion.

Surprisingly the report finds the number of households renting their residences is growing at a much slower rate than anticipated. At present there are 5.6 million renting households - only 2.2% more than last year.

Landlords' confidence levels have been hit by the new tax and regulations which are a major factor for the slower PRS growth, although in the last six months 41% of landlords felt relatively confident with their portfolio's performances.

There is also a downturn in new tenant demand as only 5% more of landlords reported an increase in demand rather than a fall, the lowest since 2012.

Throughout the United Kingdom the average monthly rent stands at £895 and although this is the highest yet, it is only a yearly rental increase of 1.5% falling from 2.4% in 2016; London's low performance of increases, has burdened the overall national average.

On the good news front, rents will be continuing to rise as 29% of landlords will be increasing them over the next six months.

Andy Golding, chief executive of the buy-to-let lender that produced the report, said: “Landlords are swallowing the unpleasant cocktail of higher taxation and tighter regulation, and this is undermining the expansion of the private rented sector.

“A fundamental shift in the landlord population is now underway, as buy-to-let moves from being a popular past-time for hundreds of thousands of British amateur landlords, to the preserve of committed long-term investors with experience and expertise. The pace of professionalisation will only increase following the PRA’s latest moves, and incorporation continues apace.

“Creating a more professional sector is no bad thing, but there is a limit to the amount of change the sector can absorb before we see a damaging reduction in supply – an outcome that would see rents increase for tenants and reduce their ability to save for a deposit for house purchase. Landlords’ confidence is better but still clearly fragile, and as the new tax reforms gradually come into force, any further financial burdens may prove to be a tipping point.”


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